CALIFORNIA 
INSURANCE  LAWS 


1912 


fi4  C,  COOPER 

INSURANCE  COMMISSIONS!! 


BANCROFT 
LIBRARY 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 


With  the  Compliments  of 


Insurance  Commissioner 


INSURANCE  LAWS 


OF  THE 


STATE  OF  CALIFORNIA 


Compiled  by 

E.  C.  COOPER,  Insurance  Commissioner 


SAN    FRANCISCO 
19  12 


SACRAMENTO 
Friend  Wm.  Richardson     -    -     Superintendent  of  State  Printing 

1912 


\U3 


5 


(,1*9*3 

BANCROFT 
LIBRARY 


PRINCIPAL  REQUIREMENTS  AS  TO  INSURANCE  COMPANIES  OE  OTHER  STATES 

AND  FOREIGN  COUNTRIES  DESIRING  TO  ENTER  THE  STATE  OF 

CAUEORNIA  EOR  THE  TRANSACTION  OE  BUSINESS. 

All  capital  stock  fire,  marine  and  life  companies  must  have  an  unim- 
paired paid-up  capital  of  at  least  $200,000.00. 

A  fire  insurance  company  may  transact,  in  addition  to  such  kind  of 
insurance,  marine,  sprinkler  insurance,  team  and  vehicle  and  miscel- 
laneous. Marine  insurance  companies  may  transact,  in  addition  to  such 
kind  of  insurance,  only  fire  insurance  and  team  and  vehicle  insurance. 
Each  of  such  companies  must  have  such  unimpaired  capital  stock  of 
at  least  $200,000.00  for  either  fire  or  marine  insurance  or  $400,000.00 
for  both  fire  and  marine  insurance.  Should  a  company  desire  to  do 
any  of  the  additional  classes  mentioned,  it  must  have  an  additional 
unimpaired  capital  of  $50,000.00  for  each  class.  No  company  shall 
do  any  of  said  kinds  of  insurance,  unless  authorized  so  to  do  by  their 
charter. 

Life  companies  may  transact,  in  addition  to  such  kind  of  insurance, 
only  accident  and  health  and  liability  insurance,  and  must  have  an  unim- 
paired capital  of  $200,000.00  and  an  additional  capital  of  $50,000.00  for 
transacting  accident  and  health  or  liability  insurance,  and  $100,000.00 
additional  capital  for  transacting  both  kinds. 

All  companies  other  than  these,  if  stock  companies,  must  have  a 
paid-up  capital,  unimpaired,  of  at  least  $100,000.00  for  transacting  one 
kind  of  business  and  $50,000.00  additional  for  transacting  any  other 
kind  of  insurance. 

A  capital  stock  company  is  insolvent  if  its  paid-in  capital  is  impaired 
more  than  twenty-five  per  cent,  although  the  balance  exceeds  the  re- 
quired amount  above  specified.  Only  that  portion  of  the  capital  stock 
can  be  considered  as  unimpaired  which  is  free  from  all  liabilities;  in- 
cluding statutory  requirements  as  to  reserves,  etc. 

Where  policyholders  participate  in  the  management  of  the  company 
(whether  it  has  a  capital  stock  or  not)  the  company  must  (in  lieu  of 
such  capital  stock)  hold  in  "available  cash  assets"  free  from  all  liabili- 
ties the  amount  above  specified  unless  some  special  provision  governs. 

Companies  organized  outside  of  the  United  States  must  have  on  de- 
posit with  some  State  official  charged  with  the  supervision  of  insurance 
in  that  State,  and  in  which  State  the  company  must  be  transacting 
business,  an  amount  equal  to  the  amount  of  capital  stock  or  cash  assets 
required.  Such  deposits  must  be  for  the  benefit  and  security  of  all 
the  policyholders  in  the  United  States. 


4  INSURANCE  LAWS  OF  CALIFORNIA. 

Such  companies  must  file  both  Home  Office  and  United  States  state- 
ments. 

Generally,  each  company  on  applying  must  file  the  following  docu- 
ments and  pay  the  fees  specified : 

1.  Certified  copy  of  Charter  (or  Articles  of  Incorporation),  and  Certificate 
as  to  Organization,  Capital  and  Assets  from  the  Insurance  Commissioner  of 

its   own   State   $55  00 

2.  Appointment  of  General  Agent  and  Stipulation 5  00 

3.  Bond  in  the  sum  of  $20,000.00 5  00 

4.  Statement  as  to  financial  Condition 20  00 

5.  Application  for  Certificate  of  Authority   (fee  for  issuing  certificate) 10  00 

6.  Certificate  of  Deposit  of  Securities  (required  only  of  companies  organized 
outside  of  the  United  States)   5  00 

Authorization  empowering  general  agent  to  sign  bond  and  appoint 
solicitors  and  agents  may  also  be  filed. 

The  Certificate  of  Authority  expires  on  July  1st  of  each  year  unless 
sooner  revoked. 

Financial  statement  must  be  on  the  latest  convention  form,  and 
must  be  verified  by  an  examination  made  either  by  the  Department  of 
the  State  in  which  the  company  is  organized;  or  by  this  Department  at 
the  company's  expense. 

Every  agent  or  solicitor  must  have  a  license  which,  unless  sooner 
revoked,  expires  on  July  1st  of  each  year ;  the  fee  for  same  is  $1.00. 

Taxes. 

All  companies  pay  a  tax  of  1^  per  cent  on  premiums,  less  return 
premiums,  and  reinsurance  in  authorized  companies. 

Retaliatory  statute. 

applies  when  statutes  of  other  States  discriminate  in  favor  of  their  do- 
mestic companies  and  may  affect  taxes,  fees  and  other  matters. 

Requirements  of  office  of  secretary  of  state. 

Companies  must  file  with  the  Secretary  of  State  at  Sacramento  cer- 
tified copies  of  their  Articles  of  Incorporation,  the  fee  for  which  varies 
according  to  the  amount  of  capital  stock,  and  an  appointment  of  agent 
upon  whom  service  of  summons  and  other  legal  process  may  be  made ; 
the  fee  for  filing. which  is  $5.00. 

Every  corporation  transacting  business  in  this  State  must  pay  the 
Secretary  of  State  a  license  tax  which  is  graded  according  to  the 
amount  of  authorized  capital  stock.  This  tax  is  payable  on  July  1st 
of  each  year  and  delinquent  on  September  1st. 


INSURANCE  LAWS  Of  THE  STATE  OP  CALIFORNIA 


POLITICAL  CODE. 


PART   III.      TITLE   I.     CHAPTER   III.      ARTICLE    II. 

Sec.    368.     Insurance  commissioner,  how  appointed. 
369.     Term  of  office. 

Insurance  commissioner,  how  appointed. 

Sec.   368.     The   following   executive  officers   are   appointed  by  the 

governor  with  the  consent  of  the  senate : 
2      *     #     • 

2.     *     *     *     the  Insurance  Commissioner     *     *     * 

Enacted  March  12,  1872. 
Term  of  office. 

Sec.  369.  The  officers  enumerated  in  the  first  subdivision  of  the 
last  section  hold  their  offices  for  the  term  of  two  years,  those  in  the 
second  subdivision  for  the  term  of  four  years,  and  those  in  the  third 
subdivision  during  the  governor's  pleasure. 

Enacted  March  12,  1872. 

PART  III.     TITLE  I.     CHAPTER  III.     ARTICLE  XVI. 

INSURANCE  COMMISSIONER. 

Sec.   588.  Eligibility. 

589.  Salary. 

591.  Rooms.     Expenses.     Special  fund. 

592.  Office. 

593.  Bond. 

594.  Insurance  classified.     Capital  stock. 
594a.  Deposits  by  foreign  companies. 

595.  General  duties  of  commissioner.     Withdrawal  of  companies. 

596.  Certificates  of  authority  to  companies.     Insurance  in  unauthorized  com- 

panies. 
596a.  Attorney  general  to  examine  documents. 

597.  Examination  of  companies. 

598.  Obtaining  and  furnishing  information  to  policyholders  and  others. 

599.  Subpoena. 

600.  Records. 

601.  Actuary. 

602.  Insolvency. 

602a.  Liability  insurance  reserve. 

603.  Revocation  for  insolvency. 

603a.  Restoration  after  revocation  for  insolvency. 

604.  Reporting  insolvency  to  attorney  general.  • 
604a.  Insolvency  laws  applicable. 

605.  Fees. 

606.  Collections  and  assessments. 

607.  Charter  and  similar  papers  to  be  filed. 

608.  Actions  not  to  be  transferred  to  United  States  court. 

609.  Approval  of  company  name. 

610.  Verifying  statements. 

611.  Filing,   adjusting  and   publishing   annual   statements. 

612.  Statements  by  companies,  other  than  life. 

613.  Statements  of  life,  health  and  accident  companies. 

614.  Mutual  companies. 

615.  Furnishing  statement  forms. 


6  INSURANCE  LAWS  OF  CALIFORNIA. 

Sec.  616.  Designation  of  principal  agent  and  stipulation  for  service  of  papers. 

617.  Penalty  for  failure  to  file  statements. 

618.  General  provisions  for  deposits. 

619.  Certificate  of  deposit. 

620.  Withdrawal  of  deposit. 

621.  Annual  examination  of  securities. 

622.  Applying  foreign  discrimination  laws. 
622a.  Tax. 

623.  Bond  of  company. 

624.  Separate  bonds. 

625.  Furnishing  information  to  assessors. 
625a.  Listing  surety  companies  to  county  clerks. 

626.  Complying  with  Civil  Code. 

627.  Computations  and  payments  on  gold  basis. 

628.  Special  valuation  of  policies  of  life  insurance  companies. 

629.  General  valuation  of  policies  of  life  insurance  companies. 

630.  Secret  and  fraternal  societies. 

631.  Reviewing  commissioner's  acts. 
631a.  Publication  of  notice  of  withdrawal. 

632.  Informing  district  attorneys. 

633.  Licensing  agents  and  solicitors. 

634.  Registration  of  policies  of  life  insurance  companies. 
634a.  Definitions  and  exceptions. 

634&.  Demanding  and  recovering  payments  other  than  fees. 

Eligibility. 

Sec.  588.  No  person  is  eligible  to  the  office  of  insurance  commissioner 
or  deputy  who  is  an  officer,  agent,  or  employee  of  an  insurance  company. 

Enacted  as  section  594,  March  12,  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  141. 

The  first  legislation  in  the  State  of  California  providing  for  a  supervisory  control 
of  the  business  of  insurance  was  the  Act  of  March  26,  1868  (Stats.  1868,  p.  336). 
By  that  act  the  office  of  insurance  commissioner  was  created.  *  *  *  The  act 
was  reenacted  in  1872,  in  sections  594  et  seq.  of  the  Political  Code.  (State  Invest- 
ment and  Insurance  Co.  vs.  Superior  Court  of  San  Francisco,  101  Cal.  143-4.) 

The  Political  Code,  from  sections  594  to  634,  inclusive,  deals  specifically  with 
insurance  corporations,  both  domestic  and  foreign,  *  *  *  and  particularly  pro- 
vides in  great  detail  how  foreign  insurance  corporations  must  put  themselves  in 
position  to  be  served  with  process  in  this  State.  (Harrigan  vs.  Home  Life  Insurance 
Company,  128  Cal.  537.) 

By  an  act,  approved  March  8,  1907,  which  went  into  effect  immediately  (Statutes 
1907,  p.  141)  article  16,  chapter  3,  part  III,  title  I,  of  the  Political  Code,  and  each 
and  every  section  thereof,  were  repealed  and  a  new  article  16,  covering  the  same 
subject  of  insurance  was  enacted.  (Commercial  Union  Assurance  Company  vs.  Wolf, 
8  Cal.  App.  413,  416.) 

Salary. 

Sec.  589.  The  annual  salary  of  the  insurance  commissioner  is  four 
thousand  dollars  and  the  annual  salary  of  the  deputy  of  the  insurance 
commissioner  is  two  thousand  seven  hundred  dollars. 

Enacted  as  sections  628  and  629,  March  12,  1872.  Amended  Stats. 
1880,  p.  411 ;  1887,  p.  12.  Repealed  and  present  section  enacted,  Stats. 
1907,  p.  141. 

Rooms,  expenses,  special  fund. 

Sec.  591.  The  commissioner  may  procure  suitable  rooms  for  his 
offices  anjl  may  provide  a  suitable  safe  and  furniture  therefor.  He  may 
also  provide  stationery,  fuel,  printing  and  other  conveniences  and  assist- 
ance and  incur  traveling  and  such  other  expenses  as  are  necessary  for 
the  transaction  of  the  business  of  his  office.  Out  of  the  funds  paid  into 
the  state  treasury  by  the  insurance  commissioner,  there  shall  be  set 
aside  and  reserved  each  and  every  year  the  sum  of  thirty  thousand 
dollars  as  a  special  fund  to  be  called  the  insurance  commissioner's  special 
fund.  All  expenditures  authorized  in  this  section  must  be  audited  by 
the  board  of  examiners,  who  must  allow  the  same  and  direct  payment 
thereof  to  be  made,  and  the  controller  shall  draw  warrants  therefor  on 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  I 

the  state  treasury  for  the  payment  of  the  same  to  the  insurance  com- 
missioner out  of  the  said  insurance  commissioner's  special  fund. 

Enacted  as  section  630,  March  12,  1872.  Amended,  Stats.  1887,  p.  12 ; 
1906,  p.  31.  Repealed  and  present  section  enacted,  Stats.  1907,  p.  141. 
Amended  May  1,  1911,  Stats.  1911,  p.  1247. 

Office. 

Sec.  592.  The  commissioner  must  keep  his  office  in  the  city  of  San 
Francisco. 

Enacted  as  section  631,  March  12,  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  141. 

Bond. 

Sec.  593.  The  commissioner  must  execute  an  official  bond  in  the  sum 
of  twenty  thousand  dollars. 

Enacted  as  section  632,  March  12,  1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  141. 

Insurance  classified.     Capital  stock. 

Sec.  594.  All  insurance  business  in  the  State  of  California  is  hereby 
classified  in  the  fifteen  kinds  as  follows: 

1.  Life  insurance  business,  including  endowments  and  annuities,  but 
not  including  health  or  accident  or  sickness  insurance  or  any  casualty 
insurance  as  hereinafter  provided. 

2.  Fire  insurance  but  not  including  any  marine  insurance,  nor  any 
inland  navigation  insurance,  nor  any  casualty  insurance  except  as  herein- 
after provided. 

3.  Marine  insurance,  including  ocean  and  inland  risks,  transportation 
and  automobiles,  but  not  including  any  other  casualty  insurance,  except 
as  hereinafter  provided. 

4.  Title  insurance,  including  insuring  owners  of  real  or  personal 
property,  or  others  interested  therein,  against  loss  by  encumbrance,  or 
defective  titles,  or  adverse  claim  to  title,  either  together  with  or  without 
examination  of  title,  or  furnishing  information  relative  thereto;  pro- 
vided, that  any  written  contract  or  instrument  issued  by  any  person, 
firm  or  corporation  purporting  to  show  the  title  to  real  property  or 
furnish  information  relative  thereto  which  shall  in  express  terms  pur- 
port to  insure  or  guarantee  such  title,  shall  be  deemed  a  policy  of  title 
insurance. 

5.  Fidelity  and  surety  insurance,  including  the  guaranteeing  of  per- 
sons holding  places  of  public  or  private  trust  and  guaranteeing  the 
performance  of  contracts  other  than  insurance  policies  and  guaranteeing 
and  executing  all  bonds,  undertakings  and  contracts  of  suretyship. 

6.  Accident  insurance,  and  either  sickness  or  health  insurance,  includ- 
ing insurance  against  injury,  disablement  or  death  resulting  from  travel- 
ing or  general  accident,  and  against  disablement  resulting  from  sickness, 
and  every  insurance  appertaining  thereto. 

7.  Plate  glass  insurance,  including  all  insurance  against  breakage  of 
glass,  whether  local  or  in  transit. 

8.  Liability  insurance,  including  all  insurance  against  loss  or  damage 
resulting  from  accident  to  or  injury,  fatal  or  non-fatal,  suffered  by  an 
employee  or  other  person  for  and  which  the  insured  is  liable. 

9.  Boiler  and  machinery  insurance,  including  insurance  upon  steam 
boiler,  and  upon  pipes,  engines,  and  machinery  connected  therewith  and 


8  INSURANCE  LAWS  OF  CALIFORNIA. 

operated  thereby,  against  explosion  and  accident,  and  against  loss  or 
damage  to  life,  person  or  property,  resulting  therefrom. 

10.  Burglary  insurance,  including  insurance  against  loss  by  burglary, 
housebreaking  or  theft. 

11.  Credit  insurance,  including  insurance  or  guaranty  either  by  agree- 
ment to  purchase  uncollectible  debts  or  otherwise,  to  insure  against  loss 
or  damage  from  the  failure  of  persons  indebted  or  to  become  indebted 
to  the  insured  or  to  meet  existing  or  contemplated  liabilities. 

12.  Sprinkler  insurance,  including  insurance  against  loss  or  damage 
by  water  to  any  goods  or  premises  arising  from  the  breakage  or  leakage 
of  sprinklers  or  water  pipes. 

13.  Team  and  vehicle  insurance,  including  insurance  against  loss  or 
legal  liability  for  loss  because  of  damage  to  property  caused  by  the  use 
of  teams  or  vehicles  whether  by  accident  or  collision  or  by  explosion  of 
any  engine  or  tank  or  boiler  or  pipe  or  tire  of  any  vehicle  and  also 
including  insurance  against  theft  of  the  whole  or  any  part  of  any 
vehicle ;  the  term  vehicle  as  here  used  includes  elevators  and  automobiles 
and  bicycles  but  does  not  include  ships  nor  vessels  nor  boats  nor  any 
railroad  rolling  stock. 

14.  Miscellaneous  insurance,  including  cyclone,  tornado,  windstorm 
and  lightning  insurance  and  any  and  all  casualty  insurance  not  included 
under  any  of  the  foregoing  thirteen  kinds,  and  which  is  a  proper  subject 
of  insurance. 

No  company  having  a  capital  stock  shall  do  in  California  any  of  said 
first  kind  of  insurance  without  having  a  capital  stock  of  at  least  two 
hundred  thousand  dollars  nor  shall  any  such  company  do  in  California 
any  other  said  kinds  of  insurance  except  the  sixth  and  eighth ;  provided, 
that  any  such  insurance  company  desiring  to  do  the  kind  of  insurance 
embraced  within  either  the  sixth  or  eighth  kind  must  have  in  addition 
to  such  two  hundred  thousand  dollars  of  capital  stock,  at  least  fifty 
thousand  dollars  of  capital  stock  and  do  the  kind  of  insurance  embraced 
within  both  the  sixth  and  eighth  kinds  at  least  the  sum  of  one  hundred 
thousand  dollars  capital  stock  in  addition  to  the  said  two  hundred  thou- 
sand dollars  of  capital  stock  required  to  do  the  first  kind  of  insurance. 

No  company  having  a  capital  stock  shall  do  in  California  any  of  said 
second  kind  of  insurance  without  having  a  capital  stock  of  at  least  two 
hundred  thousand  dollars  nor  shall  such  company  do  in  California  any 
other  of  such  kinds  of  insurance  except  the  third,  twelfth,  thirteenth 
and  fourteenth,  nor  do  the  third  without  having  in  addition  to  such  two 
hundred  thousand  dollars  capital  stock  at  least  two  hundred  thousand 
dollars  capital  stock  for  such  third  kind  of  insurance,  nor  do  any  of  the 
twelfth,  thirteenth  or  fourteenth  kinds  of  insurance  without  having  in 
addition  to  such  two  hundred  thousand  dollars  capital  stock  for  the 
second,  nor  do  any  of  the  twelfth,  thirteenth  or  fourteenth  other  than 
automobile  insurance  without  having  in  addition  to  such  four  hundred 
thousand  dollars  capital  stock  for  the  second  and  third  at  least  fifty 
thousand  dollars  capital  stock  for  each  of  such  twelfth,  thirteenth  and 
fourteenth  kinds  of  insurance,  but  no  company  shall  do  any  of  said  kinds 
of  insurance,  unless  authorized  so  to  do  by  their  charter. 

No  company  having  a  capital  stock  shall  do  in  California  any  of  said 
third  kind  of  insurance  without  having  a  capital  stock  of  at  least  two 
hundred  thousand  dollars  nor  shall  any  such  company  do  in  California 
any  other  of  said  kinds  of  insurance  except  the  second  and  thirteenth 


INSURANCE   COMMISSIONER POWERS  AND  DUTIES.  9 

nor  do  the  second  without  having  in  addition  to  such  two  hundred 
thousand  dollars  capital  stock  at  least  two  hundred  thousand  dollars 
capital  stock  for  such  second  kind  of  insurance  nor  do  any  of  the  thir- 
teenth other  than  automobile  insurance  without  having  in  addition  to 
such  two  hundred  thousand  dollars  capital  stock  for  the  third  or  in 
addition  to  such  four  hundred  thousand  dollars  capital  stock  for  the 
second  and  third  at  least  fifty  thousand  dollars  capital  stock  for  such 
thirteenth  kind  of  insurance. 

No  company  having  a  capital  stock  shall  do  in  California  any  of  the 
fourth  or  fifth  or  sixth  or  seventh  or  eighth  or  ninth  or  tenth  or  eleventh 
or  twelfth  or  thirteenth  or  fourteenth  of  said  kinds  of  insurance  without 
having  a  capital  stock  of  at  least  one  hundred  thousand  dollars  nor  shall 
any  such  company  do  in  California  any  other  of  said  fourth  or  fifth  or 
sixth  or  seventh  or  eighth  or  ninth  or  tenth  or  eleventh  or  twelfth  or 
thirteenth  or  fourteenth  kinds  of  insurance  without  having  in  addition 
to  such  one  hundred  thousand  dollars  capital  stock  at  least  fifty  thou- 
sand dollars  capital  stock  for  each  additional  kind  of  insurance.  No 
company  having  a  capital  stock  of  at  least  two  hundred  thousand  dollars, 
and  organized  to  do  in  California  the  thirteenth  kind  of  insurance,  shall 
therein  do  the  first  or  second  or  third  kind  of  insurance,  and  must  in 
addition  to  such  capital  stock  of  at  least  two  hundred  thousand  dollars, 
have  fifty  thousand  dollars  of  capital  stock  for  each  kind  of  insurance 
it  may  do  therein  other  than  the  said  thirteenth  kind. 

Such  capital  stock  required  must  be  fully  paid  up  before  the  doing 
of  any  such  business  in  the  State  of  California  except  that  companies 
incorporated  under  the  laws  of  California  must  have  at  least  twenty-five 
per  cent  of  their  capital  stock  paid  in  previous  to  the  issuance  of  any 
policies  and  the  residue  within  twelve  months  of  the  filing  of  the  cer- 
tificate of  incorporation. 

The  capital  stock  required  must  be  exclusive  of  all  liabilities  for  losses 
reported,  expenses,  taxes  and  reinsurance  of  all  outstanding  risks,  as 
provided  in  sections  602  and  602a  of  the  Political  Code. 

Every  company  organized  or  formed  under  the  laws  of  any  other 
state  or  country  as  a  mutual  or  as  a  joint  stock  and  mutual  company 
having  a  capital  stock  of  not  more  than  one  hundred  thousand  dollars 
must  have  in  lieu  of  such  capital  stock  available  cash  assets  of  at  least 
two  hundred  thousand  dollars  above  all  liabilities  for  losses  reported, 
expenses,  taxes,  and  reinsurance  of  all  outstanding  risks  as  provided  in 
sections  602  and  602a  of  the  Political  Code. 

Enacted  March  8,  i907 ;  Stats.  1907,  p.  141.  Amended,  Stats.  1909, 
p.  928.    Amended  Stats.  1911,  p.  1347. 

See  former  sections  419  and  420,  Civil  Code,  repealed  by  act  amending 
above  section  594  of  the  Political  Code.  That  portion  of  this  section 
classifying  insurance  business  was  added  to  the  law  in  1907.  The  section 
was  amended  in  1909  to  provide  for  "Team  and  Vehicle"  insurance,  and 
such  amending  act  of  1909  contained  the  following  provision:  "Sec.  2. 
The  provisions  of  this  act  shall  not  apply  to  life  or  fire  insurance  associa- 
tions operating  on  the  assessment  plan  or  on  the  fraternal  plan." 

See  sections  630  and  634a,  Political  Code;  post,  also  adopted  by  the 
act  so  adding  section  594  in  1907. 

A  corporation  was  attempted  to  be  formed  by  articles  dated  May  27,  1874,  the 
purpose  of  which  was  "to  insure  dwellings,  barns,  etc."  The  amount  of  the  capital 
stock  named  was  one  hundred  thousand  dollars,  only  five  thousand  dollars  of  which 


10  INSURANCE  LAWS  OF  CALIFORNIA. 

was  actually  subscribed.  After  doing  business  for  several  years,  the  attorney  general, 
on  the  relation  of  one  Schindler,  brought  an  action  in  the  name  of  the  people  against 
the  parties  individually,  who  were  alleged  to  constitute  the  alleged  unlawful  corpora- 
tion, to  have  them  each  and  all  restrained  from  the  usurpation  of  the  rights,  privileges, 
immunities,  and  franchises  of  a  corporation ;  but  the  alleged  corporation  was  treated 
as  a  nullity  and  was  not  joined  as  a  party  defendant.  The  trial  in  the  lower  court 
resulted  in  an  injunction  forbidding  the  alleged  corporation  from  doing  any  further 
business,  or  from  prosecuting  or  maintaining  any  action  in  its  name  or  for  its  benefit. 
On  appeal  the  supreme  court  declared  that  though  illegally  formed,  and  in  fact  never 
properly  constituted,  it  still  had  a  right  to  be  heard  as  an  entity,  and  was  a  necessary 
party  defendant  in  the  action ;  and  further,  that  it  had  a  right  under  section  400  of 
the  Civil  Code  to  wind  up  its  business  through  trustees,  collect  what  was  due  to  it, 
pay  its  debts,  and  divide  any  surplus  among  its  stockholders.  (People  ex  rel.  Schind- 
ler vs.  Flint  c*  al,  64  Cal.  49.) 

An  association  organized  to  do  fidelity  and  surety  business  must  have  a  capital 
stock  of  at  least  $100,000.00.  A  company  organized  without  capital  stock,  but  having 
in  lieu  thereof  five  bonds,  either  personal  or  surety,  each  in  the  sum  of  $20,000,000, 
is  not  organized  in  accordance  with  law  and  can  not  legally  do,  nor  obtain  a  cer- 
tificate of  authority  to  do,  any  insurance  business  in  the  State  of  California :  Opinion 
of  the  Attorney  General,  February  12,  1910. 

Deposits  by  foreign  companies. 

Sec.  594a.  No  insurance  company  organized  or  existing  under  the 
laws  of  any  country  outside  of  the  United  States  shall  transact  any 
business  of  insurance  in  the  State  of  California  without  first  making 
deposit,  and  thereafter  continuously  maintaining  such  deposit  except 
as  hereinafter  otherwise  specially  provided,  so  long  as  any  such  business 
transacted  in  this  state  remains  in  existence  for  any  purpose  whatever, 
either  unmatured  or  matured  but  unsettled,  and  whether  in  controversy 
or  not.  Such  deposit  must  be  of  securities  which  the  law  of  California 
permits  for  the  investment  of  the  assets  of  such  California  insurance 
companies.  Such  deposits  may  be  with  the  insurance  commissioner 
or  superintendent  of  insurance,  or  with  the  auditor,  comptroller  or 
general  fiscal  officer  of  any  state  in  the  United  States  in  which  said 
foreign  company  is  authorized  to  do  such  insurance  business,  or  a  like 
amount  held  in  trust  for  the  purposes  herein  specified  as  provided  for 
by  the  laws  of  that  state. 

The  amount  of  the  deposit  must  be  equal  to  the  minimum  amount  of 
the  capital  stock  or  available  cash  assets  required  by  the  preceding 
section  and  must  be  maintained  exclusive  of  all  liabilities  for  losses 
reported,  expenses,  taxes  and  reinsurance  of  all  outstanding  risks,  as 
provided  in  sections  602  and  602a  of  the  Political  Code.  Such  deposits, 
for  all  purposes  of  the  insurance  laws  of  this  state,  may  be  treated  as  a 
part  of  the  capital  of  the  company  making  it. 

If  such  deposit  is  not  so  maintained  in  the  State  of  California,  its 
existence  in  some  other  state  of  the  United  States  shall  be  certified  at 
least  annually  to  the  insurance  commissioner  of  the  State  of  California 
by  the  superintendent  of  insurance  or  commissioner  of  insurance  or 
auditor,  or  comptroller,  or  general  fiscal  officer  of  the  state  in  the  United 
States  wherein  such  deposit  is  so  maintained,  and  also  so  certified  oftener 
and  whenever  from  time  to  time  required  by  the  insurance  commissioner 
of  the  State  of  California,  and  such  certificate  shall  show  in  detail  of 
what  such  deposit  consists. 

None  of  such  securities  so  deposited  shall  be  estimated  above  the  par 
value  of  the  same  nor  above  the  market  value.  Such  deposits  must  be 
for  the  benefit  and  security  of  all  the  policyholders  of  the  company  in 
the  United  States.  Such  securities  so  deposited  with  the  insurance  com- 
missioner of  the  State  of  California  shall  be  by  him  specially  deposited 
in  the  state  treasury  in  packages  marked  with  the  name  of  the  company 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  11 

from  whom  received,  and  so  long  as  the  company  continues  solvent  it 
shall  be  permitted  to  collect  the  interest  or  dividends  on  the  securities 
so  deposited,  and  from  time  to  time  to  withdraw  such  securities  on 
depositing  other  securities  in  the  stead  of  those  to  be  withdrawn,  such 
new  securities  to  be  of  the  character  and  value  specified  in  this  section, 
but  none  of  such  securities  shall  be  withdrawn  from  the  state  treasury 
except  upon  the  written  order  of  the  company  making  the  deposit,  which 
order  must  be  indorsed  by  the  insurance  commissioner  of  the  State  of 
California  or  else  such  withdrawal  must  be  had  under  the  authority  of 
some  court  of  competent  jurisdiction,  which  must  be  obtained  if  the 
insurance  commissioner  for  any  reason  refuses  to  so  endorse  said  order. 

Whenever  such  deposit  has  been  made  with  the  insurance  commis- 
sioner of  the  State  of  California  as  provided  in  this  section,  said  com- 
missioner must  issue  to  the  company  so  depositing,  a  certificate  under 
his  official  seal  stating  the  items  and  amount  of  securities  so  deposited, 
and  their  value,  to  the  best  of  his  knowledge,  information  and  belief, 
and  in  case  of  withdrawal  and  substitution,  he  shall  issue  suitable  supple- 
mental similar  certificate.  None  of  the  provisions  of  this  section  shall 
affect  the  present  statutes  of  California,  either  as  to  registered  policies, 
or  under  what  is  known  as  the  retaliatory  law,  or  otherwise,  either  as 
to  papers,  bonds  or  other  securities. 

Enacted  March  8,  1907,  Stats.  1907,  p.  143.  Amended,  Stats.  1909, 
p.  910. 

A  deposit  in  another  state  made  by  a  company  organized  outside  the  United  States 
must  be  for  the  benefit  of  policyholders  only.  A  deposit  made  for  the  benefit  of 
"policyholders  and  creditors"  will  not  satisfy  the  requirements  of  this  section : 
Opinion  of  the  Attorney  General,  August  19,  1910. 

The  required  amount  of  deposits  need  not  be  in  a  single  state,  but  may  be  in  two  or 
more  states  of  the  United  States,  and  if,  in  the  aggregate,  the  securities  are  of  the 
required  amount,  character  and  value,  they  are  sufficient:  Opinion  of  the  Attorney 
General,  March  31,  1908. 

General  duties  of  commissioner.     Withdrawal  of  companies. 

Sec.  595.  The  insurance  commissioner  must  receive  all  bonds  and 
securities  of  persons  engaged  in  the  transaction  of  insurance  business 
in  this  state,  and  file  and  safely  keep  the  same  in  his  office,  or  deposit 
them  as  provided  by  law.  He  must  examine  and  inspect  the  financial 
condition  of  every  company  engaged,  or  which  desires  to  engage  in  the 
business  of  insurance,  and  issue  a  certificate  of  authority  to  transact 
insurance  business  in  this  state  to  any  company  in  a  solvent  condition 
which  has  fully  complied  with  the  laws  of  this  state.  He  must  determine 
the  sufficiency  and  validity  of  all  bonds  and  other  securities  required  to 
be  given  by  persons  engaged,  or  to  be  engaged,  in  insurance  business, 
and  cause  the  same  to  be  renewed  in  case  of  the  insufficiency  or  invalidity 
thereof;  and  perform  all  other  duties  imposed  upon  him  by  the  laws 
regulating  the  business  of  insurance  in  this  state,  and  enforce  the  execu- 
tion of  such  laws.  He  must  make,  on  or  before  the  first  day  of  August 
in  each  year,  a  report  to  the  governor  of  the  state,  containing  a  tabular 
statement  and  synopsis  of  the  reports  which  have  been  filed  in  his"  office, 
showing,  generally,  the  condition  of  the  insurance  business  and  interests 
in  this  state,  and  other  matters  concerning  insurance,  and  a  detailed 
verified  statement,  of  the  moneys  and  fees  of  office  received  by  him, 
and  for  what  purpose;  and  the  printing  of  said  report  and  all  other 
printing  required  by  the  insurance  department  shall  be  exempt  from 
the  provisions  of  article  twelve,  chapter  three,  title  one,  part  three  of 
the  Political  Code. 


12  INSURANCE  LAWS  OF  CALIFORNIA. 

Any  insurance  company  may  pay  the  fees  and  costs  therefor  and 
may  surrender  to  the  insurance  commissioner  its  certificate  of  authority 
previously  granted,  and  apply  to  withdraw  from  this  state,  such  appli- 
cation to  be  in  the  form  of  a  written  instrument,  duly  executed,  and 
accompanied  with  evidence  of  due  authority  for  such  execution,  and  such 
written  instrument  to  be  properly  acknowledged.  The  commissioner,  at 
the  expense  of  the  company,  paid  by  it  in  advance,  must  make  due 
publication  of  such  application  for  withdrawal,  daily,  for  the  period  of 
one  week,  in  each  of  two  daily  newspapers  of  general  circulation,  the 
one  published  in  the  city  of  San  Francisco,  and  the  other  in  the  city  of 
Sacramento. 

The  commissioner  must  make  such  examination  of  the  books  of  such 
company  as  may  be  necessary  to  ascertain  that  such  company  has  no 
liabilities  outstanding  and  not  paid  to  residents  of  this  state  and  no 
uncanceled  policies  in  favor  of  residents  of  this  state  and  if  he  finds  that 
such  company  has  no  outstanding  liabilities  to  residents  of  this  state 
and  no  uncanceled  policies  in  favor  of  the  residents  of  this  state,  he 
shall  cancel  such  certificate  of  authority.  All  such  examinations  must 
be  at  the  expense  of  the  company,  and  such  expense  must  be  paid  in 
advance. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  p.  8 ;  1877-8,  p.  13  j 
1907,  p.  13.    Repealed  and  present  section  enacted,  Stats.  1907,  p.  145. 

Provisions  somewhat  similar  to  that  portion  of  former  section  595, 
authorizing  and  requiring  the  insurance  commissioner  to  revoke  the 
certificate  of  authority  of  any  foreign  insurance  company  doing  business 
in  this  state,  which  transfers  to  the  federal  court,  from  any  court  of  this 
state,  any  action  brought  by  a  citizen  of  the  state  arising  out  of  business 
transacted  in  this  state,  have  been  reenacted  in  present  section  608,  post. 

General  duties  of  commissioner  and  his  authority  to  revoke  certificates  construed. 
(Harrigan  vs.  Home  Life  Insurance  Company,  128  Cal.  539.) 

In  a  proceeding  brought  by  a  foreign  insurance  company  to  compel  the  insurance 
commissioner  to  issue  a  license  authorizing  the  company  to  transact  business  in  this 
state  for  the  year  ending  July  1,  1908.  where  it  had  caused  removal  of  suits  to  the 
federal  courts,  the  appellate  court  held  :  It  appearing  that  at  the  time  the  act  of 
March  8,  1907,  went  into  effect,  the  company  was  doing  business  in  the  state  and  that 
its  license  had  not  been  revoked,  and  there  being  no  saving  clause  in  the  repealing 
act  providing  for  the  enforcement  of  the  penalty  for  past  delinquency,  a  removal  of 
suits  to  the  federal  court  prior  to  March  8,  1908,  was  no  authority  for  withholding 
license.     (Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413.) 

The  power  of  the  insurance  commissioner  to  revoke  the  certificate  of  authority 
under  which  a  foreign  company  is  doing  business  in  the  state  arises  only  (1)  when 
such  company  removes  an  action  to  a  federal  court,  and  (2)  when  it  becomes  insol- 
vent. He  can  cancel  its  bond  only  when  defective  in  form  or  substance,  or  when  the 
sureties  are  financially  insufficient ;  and  he  has  no  power  or  discretion  to  do  either 
merely  on  the  ground  that  such  company  is  a  member  of  an  illegal  combination  to 
raise  insurance  rates,  or  because  it  refuses  to  pay  a  tax  which  it  claims  is  illegal. 
(Liverpool,  London  &  Globe  Insurance  Company  et  al.  vs.  Clunie,  88  Fed.  Rep.  160.) 

The  commissioner  is  required  to  make  distribution  of  printed  copies  of  his  report 
under  section  337,  Political  Code,  which  section  is  as  follows : 

Sec.  337.  Of  the  report  of  the  insurance  commissioner,  the  commissioner  must 
have  printed,  at  the  expense  of  his  office,  one  thousand  copies,  and  must  deliver  of 
the  same  as  follows  :         , 

To  the  governor,  twenty  copies. 

To  the  state  librarian,  ten  copies. 

To  the  secretary  of  state,  thirty  copies. 

To  the  sergeant-at-arms  of  the  senate,  eighty  copies. 

To  the  sergeant-at-arms  of  the  assembly,  one  hundred  and  sixty  copies. 

And  the  residue  must  be  distributed  by  the  commissioner  in  furtherance  of  the 
interest  of  insurance. 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  13 

Certificates  of  authority  to  companies.    Insurance  in  unauthorized  companies. 

Sec.  596.  No  company  shall  transact  any  insurance  business  in  this 
state  without  first  complying  with  all  the  provisions  of  the  laws  of 
this  state,  and  thereafter  procuring  from  the  insurance  commissioner  a 
certificate  of  authority,  arid  continuing  to  comply  with  the  laws  of  this 
state,  provided  that  insurance  may  be  procured  from  or  placed  with 
companies  not  authorized  to  transact  business  in  this  state  upon  the  terms 
and  conditions  hereinafter  stated.  Every  such  certificate  of  authority 
shall  expire  on  the  first  day  of  the  July  after  its  issuance  unless  sooner 
revoked.  No  certificate  of  authority  shall  be  granted  or  renewed  to  any 
company  in  arrears  to  the  state  or  to  any  county,  city  and  county,  city 
or  town  in  the  state  for  fees,  licenses,  taxes,  assessments,  fines  Or  penalties 
accrued  on  business  previously  transacted  in  the  state,  nor  while  said 
company  is  otherwise  in  default  for  failure  to  comply  with  any  of  the 
laws  of  this  state  regarding  the  governmental  control  of  such  company 
by  the  state.  No  person  shall  act  as  agent  in  any  transaction  of  any 
insurance  business  for  any  insurance  company  not  authorized  to  transact 
such  business  in  this  state.  A  surplus  line  broker  is  one  licensed  by  the 
insurance  commissioner  to  act  as  broker  in  soliciting,  negotiating,  and 
effecting  insurance  under  conditions  hereinafter  stated,  to  be  procured 
from  or  placed  with  companies  not  authorized  to  transact  such  business 
in  this  state.  Within  the  meaning  of  this  law  ' '  authorized  companies ' ' 
are  those  authorized  by  the  insurance  commissioner  to  transact  in  the 
State  of  California  the  kinds  of  insurance  business  that  they  are  trans- 
acting.   All  others  are  ' '  unauthorized  companies. ' ' 

The  insurance  commissioner  may  issue  a  license  authorizing  any  indi- 
vidual to  act  as  surplus  line  broker  from  its  date  until  the  first  of  July 
following,  on  the  following  conditions : 

(a)  Payment  to  the  insurance  commissioner  of  a  fee  of  twenty-five 
($25.00)  dollars  in  advance. 

(&)  Delivery  to  the  insurance  commissioner  of  a  bond  to  the  State  of 
California  in  the  sum  of  five  thousand  ($5,000)  dollars  with  sureties 
having  the  qualifications  mentioned  in  sections  1056  and  1057  of  the 
Code  of  Civil  Procedure,  conditioned  that  said  licensee  will  fully  and 
faithfully  comply  with  the  requirements  of  section  596  of  the  Political 
Code. 

A  surplus  line  broker,  after  having  procured  from  and  placed  with 
authorized  companies  the  total  amount  of  insurance  obtainable  on  any 
property  from  a  majority  of  all  authorized  companies,  may  place  the 
excess  of  insurance  desired  over  such  amount  with  unauthorized  com- 
panies. No  insurance  is  to  be  procured  from  or  placed  with  unauthorized 
companies  by  any  one  except  by  a  surplus  line  broker  and  under  such 
conditions. 

The  following  are  the  duties  of  a  surplus  line  broker  with  which  he  is 
required  to  comply : 

1.  To  maintain  in  good  faith  an  office  in  this  state. 

2.  To  keep  in  said  office  books  of  account  correctly  showing  in  separate 
accounts  all  business  transacted  with  unauthorized  companies.  Said 
books  are  to  specify  the  dates  of  such  insurance  going  into  effect,  the 
name  of  the  insurers  and  of  the  insured,  the  gross  premiums  payable 
therefor,  the  terms,  character  of  insurance  and  locations  of  the  insured 
property.  They  shall  also  contain  statements  in  the  same  detail  of  all 
such  insurance  canceled,  or  on  which  premiums  have  been  increased  or 


14  INSURANCE  LAWS  OF  CALIFORNIA. 

reduced  and  the  amounts  of  additional  or  of  return  premiums  thereon. 
Such  books  are  to  be  open  at  all  times  for  the  inspection  of,  and  examina- 
tion by,  the  insurance  commissioner,  or  any  one  appointed  by  him  for 
said  purpose. 

3.  Within  one  week  after  the  surplus  line  broker  shall  have  obtained 
knowledge  of  the  completion  of  the  procurement  of  insurance  on  any 
property  from  an  unauthorized  company,  he  shall  file  with  the  insurance 
commissioner  a  true  report  showing  the  name  of  the  insured  and  of  the 
insurers,  the  character  of  the  insurance,  location  of  the  property,  gross 
premium  payable  therefor,  and  the  date  of  such  insurance  taking  effect 
and  the  term  thereof;  also  a  list  of  authorized  companies  comprising  a 
majority  thereof  from  whom  the  insurance  so  effected  was  not  obtain- 
able. As  soon  as  practicable  after  any  such  insurance  has  been  canceled 
or  any  premium  thereon  has  been  increased  or  reduced,  such  surplus 
line  broker  shall  file  with  the  insurance  commissioner  a  report  thereof 
in  the  same  detail  as  above  required  in  the  case  of  the  report  above 
referred  to. 

4.  On  or  before  the  first  day  of  March  of  each  year  he  shall  file  with 
the  insurance  commissioner  a  sworn  statement  of  all  business  transacted 
under  his  license  during  the  last  preceding  calendar  year  ending  Decem- 
ber 31st.  Such  statement  shall  contain  true  accounts  of  the  gross  amount 
of  insurance  procured  from  and  placed  with  unauthorized  companies 
during  said  calendar  year,  the  gross  premiums  charged  therefor  including 
additional  insurance  premiums,  and  the  gross  amount  of  all  insurance 
canceled  during  said  year,  and  the  gross  return  premiums  thereon.  Such 
statements  shall  also  include  additional  premiums  charged  during  said 
calendar  year  on  insurance  previously  effected  and  the  gross  return 
premiums  during  said  calendar  year  on  insurance  previously  effected. 

5.  All  such  reports  and  statements  shall  be  made  on  blanks  to  be  fur- 
nished surplus  line  brokers  by  the  insurance  commissioner  on  applica- 
tion therefor. 

6.  On  or  before  the  1st  day  of  June  of  each  year  said  surplus  line 
broker  shall  pay  to  the  insurance  commissioner  for  use  of  the  State  of 
California  three  (3%)  per  cent  of  the  gross  premiums  charged,  less 
three  (3%)  per  cent  of  all  return  premiums  on  policies  canceled,  or 
upon  which  the  premiums  have  been  reduced  during  the  year  ending 
December  31st  last  preceding. 

The  insurance  commissioner  shall  revoke  the  license  of  any  surplus 
line  broker  who  wilfully  fails  or  refuses  to  perform  any  of  his  duties 
hereinabove  specified.  If  in  the  opinion  of  the  insurance  commissioner 
the  solvency  of  any  surety  on  a  bond  hereby  required  has  become  im- 
paired or  doubtful,  he  shall  notify  the  surplus  line  broker  in  writing, 
and  unless  within  ten  (10)  days  after  receipt  of  such  notice  the  solvency 
of  such  surety  is  proved  to  the  satisfaction  of  the  insurance  commis- 
sioner, or  a  new  bond  is  substituted  therefor,  said  insurance  commissioner 
shall  revoke  the  license  of  the  surplus  line  broker.  The  removal  of  the 
office  of  the  surplus  line  broker  from  this  state,  or  the  removal  therefrom 
of  his  accounts  of  his  business  as  such,  or  the  closing  of  his  said  office  for 
a  period  of  more  than  twenty  (20)  consecutive  days,  shall  constitute  a 
termination  of  the  authority  of  said  surplus  line  broker,  and  shall  be 
tantamount  to  an  express  revocation  of  his  license,  whether  or  not  the 
insurance  commissioner  thereafter  revokes  the  same.  No  new  license 
shall  be  issued  to  any  surplus  line  broker  whose  license  has  been  revoked 


INSURANCE   COMMISSIONER POWERS  AND  DUTIES.  15 

for  any  reason  other  than  the  insufficiency  of  his  sureties,  within  the 
period  of  one  year  after  such  revocation,  and  until  all  indebtedness 
of  said  surplus  line  broker  on  former  business  has  been  paid  to  said 
insurance  commissioner.  Every  insured  for  whom  insurance  has  been 
effected  with  unauthorized  companies  shall  produce  for  examination  by 
the  insurance  commissioner,  whenever  requested  by  him,  in  writing,  so 
to  do,  all  policies,  contracts,  and  other  documents  evidencing  such  insur- 
ance and  disclose  to  him  the  true  amount  of  the  gross  premiums  paid  or 
agreed  to  be  paid  therefor,  or  upon  refusal  so  to  do,  he  shall  forfeit  to 
the  State  of  California,  the  sum  of  two  hundred  ($200)  dollars  for  each 
refusal.  All  policies  and  other  contracts  of  insurance  issued  without 
full  compliance  by  all  parties  concerned  with  the  laws  of  this  state, 
shall  be  null  and  void. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  pp.  9-61 ;  1877-8, 
p.  13 ;  1880,  p.  89.  Repealed  and  reenacted,  Stats:  1907,  p.  146.  Amended, 
Stats.  1911,  p.  1269. 

A  justice's  court  has  jurisdiction  of  an  action  to  recover  a  penalty  given  by 
statute ;  and  a  penalty  of  two  hundred  dollars  claimed  for  issuing  a  certificate  of 
relief  without  authority  from  the  insurance  commissioner,  is  such  a  penalty.  (Thomas 
vs.  Justice  Court,  80  Cal.  40.) 

A  contract  to  indemnify  in  case  of  loss  of  a  lighter  by  the  hirer  of  the  same  is 
not  an  insurance  contract  requiring  authority  from  the  insurance  commissioner. 
(Wilmington  Trans.  Co.  vs.  O'Neil,  98  Cal.  7.) 

In  a  proceeding  brought  by  a  foreign  insurance  company  to  compel  the  insurance 
commissioner  to  issue  a  certificate  of  authority  to  do  business  in  the  state,  the  court 
cites  this  section  and  holds  that  the  act  repealing  all  of  the  prior  sections  of  the 
Political  Code,  relating  to  the  subject  of  insurance,  contains  a  saving  clause  as  to  all 
causes  of  action  that  had  accrued,  or  that  had  been  commenced,  for  assessments, 
penalties  and  fines  under  the  repealed  law,  but  no  saving  clause  for  any  other  delin- 
quency, and  the  insurance  commissioner  had  no  authority  to  withhold  license.  (Com- 
mercial Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  417.) 

Attorney  general  to  examine  documents. 

Sec.  596a.  Before  the  insurance  commissioner  issues  any  certificate 
of  authority  or  any  other  certificate  or  gives  any  permission  or  authority 
of  any  kind,  based  upon  any  written  instrument  or  document  or  certified 
copy  thereof,  required  by  the  statutes  of  the  State  of  California,  the 
commissioner  shall  submit  such  instrument,  document  or  certified  copy 
to  the  attorney  general  of  the  State  of  California,  who  shall  examine 
the  same  and  return  it  to  the  commissioner  with  his  certificate  or  opinion 
as  to  whether  such  instrument,  document  or  certified  copy  is  in  accord- 
ance with  the  requirements  of  law,  and  such  certificate  or  opinion  of 
the  attorney  general  shall  govern  and  control  the  commissioner,  subject 
only  to  review  by  a  court  of  competent  jurisdiction,  provided  that  neither 
the  authority  to  nor  bond  of  an  agent  or  solicitor,  nor  the  annual  state- 
ments as  to  the  condition  and  affairs  need,  but  may,  be  so  submitted 
(with  the  same  effect)  by  the  commissioner  to  the  attorney  general. 

Enacted,  Stats.  1907  p.  147. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413. 
Examination  of  companies. 

Sec.  597.  The  commissioner,  whenever  he  deems  necessary,  or  when- 
ever he  is  requested  by  verified  petition,  signed  by  twenty-five  persons 
interested,  either  as  stockholders,  policyholders,  or  creditors  of  any 
company  engaged  in  insurance  business  in  this  state,  showing  that  such 
company  is  insolvent  under  the  laws  of  this  state,  must  make  an  exami- 
nation of  the  business  and  affairs  relating  to  the  insurance  business  of 
such  company,  and  must  make  such  an  examination  whenever  any  com- 
pany is  organized  to  do  insurance  business  in  this  state,  and  before 


16  INSURANCE  LAWS  OF  CALIFORNIA. 

issuing  a  certificate  of  authority  other  than  renewals  to  such  company ; 
provided,  the  insurance  commissioner  shall  have  no  authority  to  issue 
and  no  certificate  of  authority  shall  be  issued  to  any  insurance  company 
Or  corporation  hereafter  organized  or  incorporated  in  this  state,  whether 
the  same  be  organized  and  promoted  directly  or  by  means  of  a  holding 
company  or  corporation,  one  of  the  purposes  of  which  is  the  organization 
and  promotion  of  such  insurance  company  or  corporation,  where  such 
examination  shows  the  expense  of  organization  and  promotion  to  be  in 
excess  of  fifteen  per  cent  of  the  total  amount  actually  paid  on  its  capital 
stock  exclusive  of  surplus. 

Whenever  any  company  not  organized  under  the  laws  of  this  state, 
applies  for  a  certificate  of  authority  to  do  business  in  this  state,  the 
insurance  commissioner  may  make  or  cause  to  be  made  by  the  insurance 
department  of  the  state  where  such  company  is  organized,  an  examina- 
tion of  the  business  arid  affairs  relating  to  the  insurance  business  of 
such  company.  The  company  organized  or  existing  under  the  laws  of 
any  country  outside  of  the  United  States,  shall  be  deemed  to  be  organized 
within  the  meaning  of  this  act  in  any  state  wherein  such  company  main- 
tains the  deposits  required  by  the  laws  of  this  state.  For  the  purpose 
of  making  such  examination  the  insurance  commissioner  shall  have  free 
access  to  all  the  books  and  papers  of  such  company,  and  must  thoroughly 
inspect  and  examine  all  its  affairs,  and  ascertain  its  condition  and  ability 
to  fulfill  its  engagements,  and  that  it  has  complied  with  all  the  provisions 
of  law  applicable  to  its  insurance  transactions. 

Every  company  examined  under  the  provisions  of  this  section  must 
open  its  books  and  papers  for  the  inspection  of  the  commissioner, 
and  otherwise  facilitate  such  examination;  and  the  commissioner  may 
administer  oaths  and  examine  under  oath  any  person  relative  to  the 
business  of  such  company ;  and  if  he  finds  the  books  to  be  carelessly  or 
improperly  kept  or  posted  he  must  employ  sworn  experts  to  re-write, 
post,  and  balance  the  same  at  the  expense  of  such  company.  Such 
examination  must  be  conducted  in  the  county  where  such  company  has 
its  principal  office,  and  must  be  private,  unless  the  commissioner  deems 
it  necessary  to  publish  the  result  of  such  investigation  in  which  case  he 
may  publish  the  same  in  two  of  the  public  newspapers  of  this  state,  one 
of  which  must  be  published  in  the  city  of  San  Francisco.  All  examina- 
tions must  be  at  the  expense  of  the  company,  such  expense  to  be  paid 
in  advance,  and  if  any  such  company  refuses  to  pay  such  expenses  in 
advance  the  insurance  commissioner  may  refuse  to  issue  any  such  cer- 
tificate of  authority  and  must  revoke  any  existing  certificate  of  authority 
authorizing  such  company  to  do  business. 

Enacted  March  12,  1872.    New  section  enacted,  Stats.  1907,  p.  147. 
Amended,  Stats.  1911,  p.  334. 
Obtaining  and  furnishing  information  to  policyholders  and  others. 

Sec.  598.  Any  person  interested  in,  as  owner,  assignee,  pledgee  or 
payee,  of  any  policy  of  insurance  and  desiring  any  information  about 
such  policy,  may  file  with  the  insurance  commissioner  an  affidavit  show- 
ing that  he  is  entitled  to  the  benefits  of  the  provisions  of  this  section  and 
apply  to  the  insurance  commissioner  for  his  certificate  of  the  facts  or 
information  desired.  If  the  records  of  his  office  show  the  facts  or  infor- 
mation desired,  the  insurance  commissioner  shall  prepare  his  certificate 
reciting  such  facts  or  information.  If  his  records  do  not  show  the  facts 
or  information  desired  the  insurance  commissioner  may  deliver  an  order 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  17 

to  the  agent  of  the  company,  designated  under  section  616  of  the 
Political  Code,  directing  such  company  to  state  such  information  or  facts 
in  an  affidavit  and  deliver  such  affidavit  to  him. 

In  such  affidavit  the  company  must  make  a  full,  true  and  correct 
statement  of  all  the  said  facts  and  information  in  the  possession  of 
said  company,  whether  such  information  be  contained  in  the  books, 
records,  or  papers  in  this  state  or  in  any  other  state  or  country.  If 
such  company  neglects  or  refuses  to  make  and  deliver  such  affidavit 
to  the  insurance  commissioner  within  ninety  days  from  the  date  of  the 
delivery  of  the  said  order  by  the  commissioner  to  the  said  agent  as  herein 
provided,  the  commissioner  must  revoke  the  certificate  of  authority 
authorizing  the  company  to  do  business  in  this  state.  Immediately  after 
receiving  any  affidavit  from  any  insurance  company  pursuant  to  the 
provisions  of  this  section  the  commissioner  must  certify  such  affidavit 
to  the  person  so  applying  for  the  information  or  facts.  Such  affidavit 
so  certified  by  the  insurance  commissioner  shall  be  delivered  to  the 
applicant  by  delivering  it  to  him  personally  or  by  depositing  the  same 
in  the  United  States  post  office  and  prepaying  the  postage  thereon. 

If  a  loss  has  been  sustained  under  any  policy  of  insurance  and  such 
policy  has  been  lost  or  destroyed  all  rights  of  every  kind  and  nature 
and  the  time  for  the  presentation  of  notice  of  loss  and  the  time  for  the 
presentation  of  proof  of  loss  are  stayed  from  the  date  such  interested 
person  delivers  to  the  commissioner  the  affidavit  herein  provided  for 
and  until  five  days  after  the  date  of  the  delivery  by  the  insurance  com- 
missioner to  such  interested  person  of  any  affidavit  furnished  by  any 
insurance  company  pursuant  to  the  provisions  of  this  section. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  148. 

Practically  new  section  substituted  for  old  one. 
Subpoena. 

Sec.  599.  The  commissioner  may  issue  subpoenas  for  witnesses  to 
attend  and  testify  before  him  on  any  subject  touching  insurance  busi- 
ness, or  in  aid  of  his  duties,  which  may  be  served,  obeyed,  and  enforced 
as  provided  in  the  Code  of  Civil  Procedure  for  civil  cases,  and  the 
commissioner  may  issue  attachments  and  impose  the  same  penalty  which 
a  court  might  impose  for  disobedience ;  and,  in  addition,  the  defaulting 
witness  may  be  punished  as  provided  in  the  Penal  Code. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  149. 

Records. 

Sec.  600.  The  commissioner  must  keep  and  preserve  in  a  permanent 
form  a  full  record  of  his  proceedings,  including  a  concise  statement  of 
the  condition  of  each  company  visited  or  examined  by  him. 

Enacted  as  Section  603,  March  12, 1872.  Repealed  and  present  section 
enacted,  Stats.  1907,  p.  149. 

Actuary. 

Sec.  601.  The  commissioner  may  employ  an  actuary  to  make  the 
valuation  of  life  policies,  at  a  compensation  of  not  exceeding  one  cent 
for  each  thousand  dollars  of  insurance,  to  be  paid  by  the  company  for 
which  the  valuation  is  made. 

Enacted  as  Section  604,  March  12, 1872.    Repealed  and  present  section 
enacted,  Stats.  1907,  p.  149. 
2— IN 


18  INSURANCE  LAWS  OF  CALIFORNIA. 

Insolvency. 

Sec.  602.  Whenever  provisions  for  the  liabilities  of  any  company 
engaged  in  the  business  of  fire,  marine,  or  inland  navigation  insurance  in 
this  state,  for  losses  reported,  expenses,  taxes  and  reinsurance  of  all  out- 
standing risks,  estimated  at  fifty  per  cent  of  the  premiums  received  and 
receivable  on  all  fire  risks  and  marine  time  risks,  at  the  full  premiums 
received  and  receivable  on  all  other  marine  risks,  would  so  far  impair 
its  capital  paid  in  as  to  reduce  the  same  below  two  hundred  thousand 
dollars,  or  below  seventy-five  per  cent  of  said  capital  paid  in,  such  com- 
pany is  insolvent ;  and  in  case  of  a  company  engaged  in  such  insurance 
in  this  state,  on  the  mutual  plan,  if  the  available  cash  assets  of  such  com- 
pany shall  not  exceed  its  liabilities,  as  hereinbefore  enumerated,  in  the 
full  sum  of  two  hundred  thousand  dollars,  such  company  is  insolvent; 
and  wherever  provision  for  the  liabilities  of  any  company  engaged  in  the 
business  of  insuring  any  one  against  loss  or  damage  resulting  from 
accident  to  or  injury  suffered  by  an  employee  or  other  person  for  which 
the  person  insured  may  be  liable,  for  losses  reported,  expenses,  taxes 
and  reinsurance  of  all  outstanding  risks  estimated  as  provided  in  section 
602a  of  the  Political  Code  would  so  far  impair  its  capital  paid  in  as  to 
reduce  the  same  below  one  hundred  thousand  dollars,  or  below  seventy- 
five  per  cent  of  said  capital  paid  in,  such  company  is  insolvent;  and 
whenever  provision  for  the  liabilities  of  any  company  engaged  in  any 
kind  of  insurance  business  in  this  state,  other  than  life,  liability,  and 
insurance  of  titles  to  real  estate,  provided  for  in  section  594  of  the 
Political  Code  of  this  state,  for  losses  reported,  expenses,  taxes,  and 
reinsurance  of  all  outstanding  risks,  estimated  at  such  rates  as  are 
accepted  by  the  insurance  authorities  of  the  State  of  New  York,  would 
so  far  impair  its  capital  paid  in  as  to  reduce  the  same  below  one  hun- 
dred thousand  dollars,  or  below  seventy-five  per  cent  of  said  capital 
stock  paid  in,  such  company  is  insolvent;  and  in  case  of  a  company 
engaged  in  such  insurance  business  in  this  state,  on  the  mutual  plan, 
if  its  available  cash  assets  shall  not  exceed  its  liabilities,  as  hereinbefore 
enumerated,  in  the  full  sum  of  one  hundred  thousand  dollars,  such 
company  is  insolvent.  In  the  case  of  a  company  engaged  in  the  business 
of  life  insurance,  whenever  its  liabilities  for  losses  reported,  expenses, 
taxes,  and  reinsurance  of  all  its  outstanding  risks  written  prior  to 
January  1st,  eighteen  hundred  and  ninety-two,  at  the  rates  based  upon 
the  American  Experience  Table  of  Mortality  with  interest  at  the  rate 
of  four  and  one  half  per  cent  per  annum,  and  reinsurance  of  all  its  out- 
standing risks  written  from  and  after  the  thirty-first  day  of  December, 
eighteen  hundred  and  ninety-one,  up  to  and  including  the  thirty-first 
day  of  December,  nineteen  hundred  and  seven,  at  rates  based  upon  the 
Combined  Experience  or  Actuaries'  Table  of  Mortality  with  interest 
at  the  rate  of  four  per  cent  per  annum,  and  reinsurance  of  all  its 
outstanding  risks  written  from  and  after  December  thirty-first,  nineteen 
hundred  and  seven,  at  rates  based  upon  the  American  Experience  Table 
of  Mortality  with  interest  at  the  rate  of  three  and  one  half  per  cent 
per  annum,  exceeds  its  assets,  such  company  is  insolvent.  In  the  case 
of  a  company  engaged  in  the  business  of  insurance  of  the  title  to  real 
estate,  whenever  provision  for  its  liability  for  losses  reported,  expenses, 
and  taxes,  would,  after  exhausting  its  surplus  fund,  required  by  section 
432  of  the  Civil  Code  or  otherwise,  so  far  impair  its  capital  stock  paid 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  19 

in  as  to  reduce  the  same  below  one  hundred  thousand  dollars,  Or  below 
seventy-five  per  cent  of  said  capital  paid  in,  such  company  is  insolvent. 

The  provisions  of  this  act  shall  not  apply  to  life  or  fire  insurance 
associations  operating  on  the  assessment  plan  or  on  the  fraternal  plan. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  pp.  9  and  62; 
1877-8,  p.  14;  1887,  p.  19;  1905,  p.  379.  Repealed  by  act  approved 
March  8,  1907,  arid  present  section,  with  same  number,  covering  same 
subject  matter  with  material  important  changes,  enacted,  Stats.  1907, 
p.  149.  Amended  by  act  approved  April  15,  1909,  Stats.  1909,  p.  915, 
and  such  amending  act  in  1909  contained  the  sentence  appearing  at  the 
end  of  the  section  as  above  given. 

See  comment  in  connection  with  section  594,  Political  Code,  ante. 

See  State  Investment  &  Ins.  Co.  vs.  Superior  Court,  101  Cal.  135,  144,  145,  149. 

Liability  insurance  reserve. 

Sec:  602a.  In  estimating  the  condition  of  any  company  engaged  in 
the  business  of  liability  insurance  under  the  provisions  of  this  article 
the  insurance  commissioner  shall  charge  as  liabilities  all  outstanding 
indebtedness  of  such  company,  and  the  premium  reserve  on  policies  in 
force,  equal  to  the  unearned  portions  of  the  gross  premiums  charged  for 
covering  risks,  computed  on  each  respective  risk  from  the  date  of  the 
issuance  of  the  policy.  There  shall  also  be  charged  as  a  liability  to  each 
company  engaged  in  the  business  of  insuring  any  one  against  loss  or 
damage  resulting  from  accident  to  or  injury  suffered  by  an  employe  or 
other  person  for  which  the  person  insured  may  be  liable,  whether  a 
natural  person,  a  firm  or  a  corporation  organized  under  the  laws  of  this 
or  any  other  state  or  country,  a  further  reserve  as  hereinafter  provided. 
For  the  purpose  of  computing  said  reserve,  each  company  which  has  been 
engaged  in  liability  underwriting  for  ten  years  or  more,  shall,  on  or 
before  the  first  day  of  October  in  each  year,  state  in  writing  to  the  insur- 
ance commissioner  its  experience  in  the  United  States,  under  all  forms 
of  liability  policies,  each  year  separately  according  to  the  calendar  years 
in  which  the  policies  were  written,  during  a  period  of  five  years  com- 
mencing ten  years  previous  to  the  thirty-first  day  of  December  of 
the  year  in  which  the  statement  is  made,  in  the  following  particulars 
namely :  The  number  of  persons  reported  injured  under  all  of  the  forms 
of  liability  policies,  whether  such  injuries  were  reported  to  the  home 
office  of  the  given  person  or  to  any  of  his  representatives ;  the  amount  of 
all  payments  made  on  account  or  in  consequence  of  injuries  reported 
under  such  policies;  the  number  and  amount,  separately,  of  all  suits 
or  actions  against  policyholders  under  such  policies  which  have  been 
settled,  either  by  payment  or  compromise;  both  of  the  above  amounts 
to  be  ascertained  as  of  date  of  the  thirty-first  day  of  August  of  the  year 
in  which  the  statement  is  made,  and  to  include  in  the  case  of  suits  all 
payments  made  on  account  or  in  consequence  of  the  injury  from  which 
the  suit  arose,  whether  prior  to  or  later  than  the  date  at  which  the  suit 
was  brought.  Each  person  shall  thereupon  reserve  upon  all  said  kind  of 
policies,  irrespective  of  the  date  at  which  the  policies  were  issued,  (1)  for 
each  suit  or  action  pending,  on  injuries  reported  prior  to  eighteen  months 
previous  to  the  date  of  making  the  statement,  whether  such  injuries  were 
reported  to  the  home  office  of  the  given  company  or  to  any  of  its  repre- 
sentatives, and  which  is  being  defended  for  or  on  account  of  the  holder 
of  any  such  policy,  the.  average  cost  thereof  as  shown  by  said  experience, 
and  (2)  for  injuries  reported  under  such  policies  at  any  time  within 
eighteen  months,  whether  such  injuries  were  reported  to  the  home  office 


20  INSURANCE  LAWS  OF  CALIFORNIA. 

of  the  given  person  or  to  any  of  his  representatives,  the  average  cost  for 
each  injured  person  as  shown  by  said  experience.  From  the  sum  so 
ascertained  the  person  may  deduct  (1)  the  amount  of  all  payments 
on  said  pending  suits  on  injuries  reported  prior  to  eighteen  months, 
including  all  payments  made  on  account  or  in  consequence  of  the  injury 
from  which  the  suit  arose,  whether  prior  to  or  later  than  the  date  at 
which  the  suit  was  brought,  and  (2)  the  amount  of  all  payments  made 
on  account  or  in  consequence  of  said  injuries  reported  within  eighteen 
months ;  both  of  the  above  amounts  to  be  taken  as  of  the  date  at  which 
the  statement  is  made.  Any  person  who  now  issues,  or  shall  hereafter 
issue,  liability  policies  as  aforesaid,  and  who  shall  not  be  engaged  in 
liability  underwriting  for  ten  years,  shall  nevertheless,  until  such  times 
as  he  may  be  able  to  state  his  experience  of  the  period  hereinbefore 
required,  make  and  maintain  a  reserve  upon  all  said  kind  of  policies, 
irrespective  of  the  date  at  which  the  policies  were  issued,  determined  as 
follows:  (1)  For  each  suit  or  action  pending,  on  injuries  reported  prior 
to  eighteen  months  previous  to  the  date  of  making  the  statement,  whether 
such  injuries  were  reported  to  the  home  office  of  the  given  company 
or  to  any.  of  his  representatives,  and  which  is  being  defended  for  or  on 
account  of  the  holder  of  any  such  policy,  the  average  cost  thereof  as 
shown  by  the  average  of  said  experience  of  all  other  persons  stated  as 
required  by  this  section,  and  (2)  for  injuries  reported  under  such 
policies  at  any  time  within  eighteen  months,  whether  such  injuries  were 
reported  to  the  home  office  of  the  given  person  or  to  any  of  his  repre- 
sentatives, the  average  cost  for  each  injured  person  as  shown  by  the 
average  of  said  experience  of  all  other  companies  stated  as  required  by 
this  section ;  which  average  costs  for  suits  and  for  injured  persons  shall 
be  furnished  by  the  insurance  commissioner  to  each  such  company  on  or 
before  the  first  day  of  December,  in  each  year.  From  the  sum  so  ascer- 
tained each  company  may  deduct  (1)  the  amount  of  all  payment  on 
said  pending  suits  on  injuries  reported  prior  to  eighteen  months,  includ- 
ing all  payments  made  on  account  or  in  consequence  of  the  injury  from 
which  the  suit  arose,  whether  prior  to  or  later  than  the  date  at  which 
the  suit  was  brought,  and  (2)  the  amount  of  all  payments  made  on 
account  or  in  consequence  of  said  injuries  reported  within  eighteen 
months ;  both  of  the  above  amounts  to  be  taken  as  of  the  date  at  which 
the  statement  is  made. 

Enacted  as  section  612a,  Stats.  1905,  p.  380.  Repealed  and  present 
section  enacted,  Stats.  1907,  p.  151. 

Revocation  for  insolvency. 

Sec.  603.  Whenever  the  commissioner  ascertains  that  any  company 
engaged  in  the  insurance  business  is  insolvent  within  the  meaning  of 
this  chapter,  he  must  revoke  the  certificate  of  authority  granted,  and 
send  by  mail  to  such  company,  addressed  to  it  at  its  principal  place  of 
business,  or  deliver  to  it,  a  notice  of  such  revocation  and  cause  a  copy  of 
such  notice  together  with  the  proof  of  service  to  be  filed  in  his  office. 

Enacted  as  first  part  of  section  600,  March  12,  1872.  Repealed  and 
present  section  enacted,  Stats.  1907,  p.  152.  Original  Code  section  603 
is  now  section  600. 

See  State  Investment  and  Insurance  Company  vs.  Superior  Court  of  San  Francisco, 
101  Cal.  135,  which  cites  the  following,  viz. : 

The  insolvency  of  an  insurance  company  which  will  authorize  the  insurance 
commissioner  to  revoke  his  certificate  of  authority  and  require  the  corporation   to 


INSURANCE  COMMISSIONER — POWERS  AND  DUTIES.  21 

repair  its  capital  is  of  a  merely  arbitrary  character,  defined  by  the  statute.  It  is  not 
the  ordinary  commercial  insolvency ;  and  for  the  purposes  of  the  statute  it  may  be 
held  insolvent,  while  at  the  same  time  it  may  be  actually  solvent  in  a  business  sense, 
and  justly  so  regarded  by  the  commercial  world.  The  commissioner  may  stop,  in 
his  discretion,  with  the  delivery  of  the  requisition  directing  the  corporation  to  repair 
its  capital,  before  resorting  to  harsher  measures  such  as  revoking  his  certificate  and 
making  publication  of  the  insolvency  of  the  company.  (Palache  vs.  Pacific  Insurance 
Co.,  42  Cal.  432-434.) 

The  power  of  the  insurance  commissioner  to  revoke  the  certificate  of  authority 
under  which  a  foreign  company  is  doing  business  in  the  state  arises  only  (1)  when 
such  company  removes  an  action  to  a  federal  court,  and  (2)  when  it  becomes  insol- 
vent.    (Liverpool,  London  &  Globe  Insurance  Company  vs.  Clunie,  88  Fed.  Rep.  160.) 

See  section  597,  Pol.  Code,  ante. 

Restoration  after  revocation  for  insolvency. 

Sec.  603a.  If  any  insurance  company  (whose  certificate  of  authority 
has  been  revoked  by  the  insurance  commissioner  on  the  ground  that  such 
company  is  insolvent)  within  ninety  days  after  the  receipt  of  the  notice 
of  revocation,  shall  repair  its  capital  to  such  an  extent  that  such  com- 
pany is  solvent  within  the  provisions  of  section  six  hundred  and  two 
(602)  of  the  Political  Code,  then  upon  such  fact  being  made  to  appear 
to  the  insurance  commissioner,  he  may  issue  a  new  certificate  of  authority 
in  the  same  manner  and  to  the  same  effect  as  an  original  certificate  of 
authority. 

Enacted  as  section  600a  in  1907,  Stats.  1907,  p.  149,  and  number 
changed  to  603a  in  1909,  Stats.  1909,  p.  913.    The  act  of  1909  provided : 

"Sec.  3.  Nothing  herein  contained  shall  affect  any  rights  acquired 
under  said  section  600a,  but  all  such  rights  shall  be  preserved  under  the 
provisions  of  said  section  603a." 

See  old  section  600. 

See  note  to  preceding  section. 
Reporting  insolvency  to  attorney  general. 

Sec.  604.  When  the  insurance  commissioner  ascertains  that  any 
insurance  corporation  organized  under  the  laws  of  this  state  is  insolvent 
he  must  certify  such  fact  to  the  attorney  general.  Upon  receipt  of  such 
certificate  so  made  by  the  insurance  commissioner,  the  attorney  general 
must  commence  an  action  against  such  company  under  the  provisions  of 
chapter  V,  title  X,  part  II  of  the  Code  of  Civil  Procedure.  If  on  the 
trial  of  any  such  action  it  appears  to  the  court  that  such  company  is 
insolvent,  before  causing  judgment  to  be  entered,  the  court  may  direct 
the  corporation  and  the  officers  thereof  to  levy  an  assessment  on  the 
capital  stock  sufficient  to  enable  the  defendant  corporation  to  pay  its 
debts,  and  in  such  order  shall  give  full  directions  as  to  the  manner  of 
levying  such  assessment  and  the  amount  thereof,  and  such  assessment 
must  be  levied  before  judgment  is  entered.  In  all  other  respects  the 
relief  awarded  against  the  defendant  company  shall  be  the  same  as 
provided  in  said  chapter  five  of  the  Code  of  Civil  Procedure.  Any 
receiver  thereafter  appointed  to  liquidate  the  affairs  of  such  company, 
shall  have  full  power  to  bring  such  actions  as  may  be  necessary  for  the 
purpose  of  recovering  the  amounts  of  the  assessments  levied  as  herein 
provided.  In  any  action  commenced  pursuant  to  the  provisions  of  this 
section  the  court  shall  have  power  to  authorize  the  defendant  insurance 
company,  or  the  receiver  appointed  to  liquidate  the  affairs  of  such  com- 
pany, to  reinsure  all  or  any  part  of  the  business  theretofore  written  by 
such  company. 

Enacted,  Stats.  1907,  p.  153.    Amended,  Stats.  1909,  p.  916. 

See  note  to  section  603,  ante. 


22  INSURANCE  LAWS  OF  CALIFORNIA. 

Insolvency  laws  applicable. 

Sec.  604a.  When  the  insurance  commissioner  shall  have  revoked  the 
certificate  of  authority  authorizing  any  insurance  company,  not  a  cor- 
poration, to  do  business  on  the  ground  that  such  company  is  insolvent, 
any  person  or  persons  may  commence  insolvency  proceedings  against 
such  company.  Such  proceedings  must  be  done,  had,  and  taken  in  all 
respects  as  provided  bv  the  then  existing  insolvency  laws  of  the  state. 

Enacted,  Stats.  1907,  p.  153. 
Fees. 

Sec.  605.  The  commissioner  must  require  in  advance,  in  United 
States  gold  coin,  the  following  fees:  (1)  For  filing  papers  required 
under  either  of  subdivisions  two  or  three  or  four  of  section  607  of  the 
Political  Code,  fifty-five  dollars;  (2)  for  filing  papers  required  under 
subdivision  five  of  section  607  of  the  Political  Code,  on  account  of 
change  or  changes  made  at  one  time,  ten  dollars;  (3)  for  filing  annual 
statement  required  to  be  filed,  twenty  dollars ;  (4)  for  filing  bond  under 
section  623  of  the  Political  Code,  five  dollars;  (5)  for  filing  appointment 
of  agent  or  stipulation  or  both  appointment  and  stipulation  under  sec- 
tion 616  of  the  Political  Code,  five  dollars;  (6)  for  filing  each  certificate 
of  deposit  of  securities  under  section  594a  of  the  Political  Code,  five 
dollars;  (7)  for  furnishing  copies  of  papers  filed  in  his  office,  twenty 
cents  per  folio;  (8)  for  certifying  copies,  one  dollar  each;  (9)  for  each 
certificate  issued,  as  provided  in  section  619  of  the  Political  Code,  five 
dollars;  (10)  for  registering  each  policy  as  provided  by  section  634  of 
the  Political  Code,  one  dollar;  (11)  for  issuing  each  annual  certificate 
of  authority  authorizing  any  insurance  company  to  transact  business  in 
this  state,  ten  dollars;  (12)  for  issuing  each  annual  license  under  section 
633  of  the  Political  Code,  to  an  agent  or  solicitor,  one  dollar;  (13)  for 
issuing  each  annual  license  under  section  633a  of  the  Political  Code  to 
an  insurance  broker,  ten  dollars;  (14)  for  attaching  the  seal  of  office  to 
any  paper  or  document  not  herein  specified,  one  dollar;  (15)  for  issuing 
any  other  certificate,  two  dollars. 

Enacted  March  12,   1872.     Repealed  and  present  section  enacted, 
Stats.  1907,  p.  153.    Amended,  Stats.  1909,  p.  917. 
Collections  and  assessments. 

Sec.  606.  If  the  salary  of  the  commissioner  and  the  expenses  of  his 
office  exceed  the  fees  and  charges  collected  by  him,  such  excess  must  be 
annually  assessed  by  the  commissioner  upon  all  persons  or  corporations 
engaged  in  the  business  of  insurance  in  this  state,  and  they  are  severally 
liable  therefor,  pro  rata,  according  to  the  amount  of  premiums  received 
or  receivable  from  risks  taken  in  this  state,  respectively,  during  the  year 
ending  on  the  thirty-first  day  of  December  next  preceding  the  assess- 
ment. The  commissioner  must  collect  all  fees  and  assessments,  and  pay 
monthly  into  the  state  treasury  whatever  amounts  may  be  received  and 
collected  by  him.  If  any  insurance  company  neglects  or  refuses  to  pay 
the  amount  of  any  such  assessments  within  ten  days  after  demand 
thereof  in  writing  by  the  insurance  commissioner,  the  commissioner 
may  revoke  the  certificate  of  authority  previously  granted  and  commence 
an  action  to  recover  such  assessment. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  154. 

An  officer  of  the  state  has  no  authority  to  loan  the  moneys  of  the  state,  nor  to 
deposit  the  same  as  a  general  deposit  in  a  bank,  although  such  deposit  be  made  by 
him  as  an  agent  of  the  state,  and  not  upon  his  individual  account.  (People  vs. 
Wilson,  117  Cal.  242.) 


INSUEANCE   COMMISSIONER POWERS  AND  DUTIES.  23 

Charter  and  similar  papers  to  be  filed. 

Sec.  607.  The  commissioner  must  cause  every  company,  before 
engaging  in  the  business  of  insurance,  to  file  in  his  office  as  follows : 

1.  A  certified  copy  of  the  last  annual  statement  or  a  verified  finan- 
cial statement  exhibiting  the  condition  and  affairs  of  such  company. 

2.  If  incorporated  under  the  laws  of  this  state,  a  copy  of  the  articles 
of  incorporation  and  certificate  of  any  increase  or  diminution  of  the 
capital  stock,  certified  by  the  secretary  of  state  to  be  a  copy  of  that  which 
is  filed  in  his  office. 

3.  If  incorporated  under  the  laws  of  any  other  state  or  country,  a 
copy  of  the  articles  of  incorporation,  if  organized  or  formed  under  any 
law  requiring  articles  to  be  filed,  duly  certified  by  the  officer  having  the 
custody  of  such  articles,  or  if  not  so  organized,  a  copy  of  the  law,  charter, 
or  deed  of  settlement  under  which  the  deed  of  organization  is  made,  duly 
certified  by  the  proper  custodian  thereof,  or  proved  by  affidavit  to  be  a 
copy ;  also,  a  certificate  under  the  hand  and  seal  of  the  proper  officer  of 
such  state  or  country  having  supervision  of  insurance  business  therein, 
if  any  there  be,  that  such  corporation  or  company  is  organized  under  the 
laws  of  such  state  or  country,  with  the  amount  of  capital  stock  or  assets 
required  by  this  article. 

4.  If  not  incorporated,  a  certificate  setting  forth  the  nature  and 
character  of  the  business,  the  location  of  the  principal  office,  the  names 
of  the  persons  and  of  those  composing  the  company,  firm,  or  association, 
the  amount  of  actual  capital  employed  or  to  be  employed  therein,  and 
the  names  of  all  officers  and  persons  by  whom  the  business  is  or  may  be 
managed. 

The  certificate  must  be  verified  by  the  affidavit  of  the  chief  officer, 
secretary,  agent,  or  manager  of  the  company;  and  if  there  are  any 
written  articles  of  agreement  or  company,  a  copy  thereof  must  accom- 
pany such  certificates. 

Enacted  March  12,  1872.  Amended,  Stats.  1887,  p.  8.  Repealed  and 
new  section  enacted,  Stats.  1907,  p.  155.    Amended,  Stats.  1911,  p.  1351. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-19. 
Actions  not  to  be  transferred  to  United  States  court. 

Sec.  608.  If  any  foreign  insurance  company  doing  business  in  this 
state  shall  transfer  or  cause  to  be  transferred  to  the  United  States 
circuit  court  from  any  court  of  this  state  having  jurisdiction  of  the 
subject-matter,  any  action  or  special  proceeding  arising  or  growing  out 
of  any  business  previously  transacted  in  this  state,  then  the  insurance 
commissioner  shall  have  the  power  and  it  shall  be  his  duty  upon  receiv- 
ing a  certified  copy  of  the  record  showing  the  facts  herinabove  set  forth 
to  immediately  revoke  the  certificate  of  authority  authorizing  such  com- 
pany to  transact  insurance  business  in  this  state. 

Enacted  March  18,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  155. 

See  old  section  595. 

Under  this  section  it  is  the  duty  of  the  insurance  commissioner,  "upon  receiving  a 
certified  copy  of  the  record  showing  the  facts  hereinabove  set  forth,  to  immediately 
revoke  the  certificate  of  authority."  Such  revocation  only  deprives  the  insurance 
company  of  the  right  to  transact  insurance  business  in  the  state  until  July  1,  follow- 
ing. The  license  or  certificate  of  authority  under  the  act  in  every  case  expires  on  the 
first  day  of  July  after  its  issuance,  and  must  be  renewed  annually.  The  act  of  revok- 
ing can  only  deprive  the  company  of  that  which  the  commissioner  had  already  given 
by  issuing  the  certificate.  {Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal. 
App.  413-19.) 


24  INSURANCE  LAWS  OF  CALIFORNIA. 

Approval  of  company  name. 

Sec.  609.  The  commissioner  must  require  the  name  under  which  any 
company  hereafter  proposes  to  be  formed  or  organized  under  the  laws 
of  this  state,  for  the  transaction  of  insurance  business,  to  be  submitted 
to  him  before  the  commencement  of  such  business;  and  he  may  reject 
any  name  or  title  so  submitted  when  the  same  is  an  interference  with  or 
too  similar  to  one  already  appropriated,  or  likely  to  mislead  the  public 
in  any  respect ;  and  in  such  case  a  name  not  liable  to  such  objection  must 
be  chosen. 

Enacted  March  12,   1872.     Repealed  and  present  section  enacted, 
Stats.  1907,  p.  155. 
Verifying  statements. 

Sec.  610.  The  commissioner  must  require  statements  and  reports  to 
be  verified  as  follows:  (1)  If  it  be  made  by  a  corporation  organized 
under  the  laws  of  this  state,  by  the  oaths  of  any  two  of  the  executive 
officers  thereof;  (2)  If  it  be  made  by  an  individual  or  firm,  by  the  oath 
of  such  individual  or  member  of  the  firm;  (3)  if  made  by  a  foreign 
insurance  company,  or  person,  by  the  oath  of  the  principal  executive 
officer  thereof,  or  manager  residing  within  the  United  States. 

Enacted  March  12,  1872.    Amended,  Stats.  1873-74,  p.  10 ;  1887,  p.  9, 
Repealed  and  present  section  enacted,  Stats.  1907,  p.  155. 
Filing,  adjusting  and  publishing  annual  statement. 

Sec.  611.  All  insurance  companies  doing  business  in  this  state  must 
make  and  file  with  the  insurance  commissioner,  on  or  before  the  first 
day  of  March  of  each  year,  statements,  which  must  exhibit  the  condition 
and  affairs  of  every  such  company,  on  the  thirty-first  day  of  December 
then  next  preceding,  a  synopsis  of  which  statements,  as  adjusted  by  the 
commissioner  upon  a  proper  examination  of  the  same,  must  be  published 
by  such  company  in  the  city  or  city  and  county  where  the  principal 
office  in  this  state  is  located,  said  publication  to  be  daily  for  the  period 
of  one  week  in  some  daily  newspaper  of  general  circulation  or  four 
consecutive  times  in  some  weekly  newspaper  of  general  circulation. 

Enacted,  March  12,  1872.  Amended,  Stats.  1873-74,  p.  10 :  1877-78, 
p.  15 ;  1887,  p.  9.  Repealed  and  new  section  enacted,  Stats.  1907,  p.  155. 
Amended,  Stats.  1911,  p.  1274. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-19. 
Statement  by  companies,  other  than  life. 

Sec.  612.  Such  statement,  if  made  by  other  than  life  insurance  com- 
panies, must  show : 

First — The  amount  of  the  capital  stock  of  the  company. 

Second — The  property  or  assets  held  by  the  company  specifying: 

1.  The  value  of  real  estate  held  by  said  company ; 

2.  The  amount  of  cash  on  hand  and  deposited  in  banks  to  the  credit 
of  the  company,  specifying  the  same ; 

3.  The  amount  of  cash  in  the  hands  of  agents,  and  in  course  of  trans- 
mission ; 

4.  The  amount  of  loans  secured  by  bonds  and  mortgages,  constituting 
the  first  lien  on  real  estate,  on  which  there  is  less  than  one  year 's  interest 
due  or  owing ; 

5.  The  amount  of  loans  on  which  interest  has  not  been  paid  within  one 
year  previous  to  such  statement ; 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  25 

6.  The  amount  due  the  company  upon  which  judgments  have  been 
obtained ; 

7.  The  amount  of  stocks  of  this  state,  of  the  United  States,  or  any 
incorporated  city  of  this  state,  and  of  any  other  stocks  owned  by  the 
company,  specifying  the  amount,  number  of  shares,  and  par  and  market 
value  of  each  kind  of  stocks ; 

8.  The' amount  of  stocks  held  as  collateral  security  for  loans,  with  the 
amount  loaned  on  each  kind  of  stock,  its  par  value  and  its  market  value ; 

9.  The  amount  of  interest  due  and  unpaid; 

10.  The  amount  of  all  other  loans  made  by  the  company,  specifying 
the  same ; 

11.  The  amount  premium  notes  on  hand  on  which  policies  are  issued; 

12.  All  other  property  belonging  to  the  company,  specifying  the  same. 
Third — The  liabilities  of  such  company,  specifying : 

1.  The  amount  of  losses  due  and  unpaid; 

2.  The  amount  of  claims  for  losses  resisted  by  the  company ; 

3.  The  amount  of  losses  in  process  of  adjustment  or  in  suspense, 
including  all  reported  or  supposed  losses ; 

4.  The  amount  of  dividends  declared,  due,  and  remaining  unpaid ; 

5.  The  amount  of  dividends  declared,  but  not  due ; 

6.  The  amount  of  money  borrowed  and  security  given  for  the  payment 
thereof ; 

7.  Gross  premium  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  fire  risks  running  one  year  or  less  from  date  of 
policy,  reinsurance  thereon  at  fifty  per  cent; 

8.  Gross  premiums  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  fire  risks  running  more  than  one  year  from  the  date 
of  policy,  reinsurance  thereon  pro  rata ; 

9.  Gross  premiums  (without  any  deductions)  received  and  receivable 
upon  all  unexpired  marine  and  inland  navigation  risks,  except  time 
risks,  reinsurance  thereon  at  one  hundred  per  cent ; 

10.  Gross  premiums  (without  any  deductions)  received  and  receivable 
on  marine  time  risks,  reinsurance  thereon  at  fifty  per  cent ; 

11.  Amount  reclaimable  by  the  insured  on  perpetual  fire  insurance 
policies,  being  ninety-five  per  cent  of  the  premiums  or  deposit  received ; 

12.  Reinsurance  fund  and  all  other  liabilities,  except  capital; 

13.  Unused  balances  of  bills  and  notes  taken  in  advance  for  premiums 
on  open  marine  and  inland  policies,  or  otherwise,  returnable  on  settle- 
ment ; 

14.  Principal  unpaid  on  scrip  or  certificates  of  profits,  which  have 
been  authorized  or  ordered  to  be  redeemed ; 

15.  Amount  of  all  other  liabilities  of  the  company,  specifying  the  same. 
Fourth — The  income  of  the  company  during  the  preceding  year, 

specifying : 

1.  The  amount  of  cash  premiums  received ; 

2.  The  amount  of  notes  received  from  premiums ; 

3.  The  amount  of  interest  money  received,  specifying  the  same ; 

4.  The  amount  of  income  received  from  all  other  sources,  specifying 
the  same. 

Fifth — The  expenditures  of  the  preceding  year,  specifying : 

1.  The  amount  of  losses  paid ; 

2.  The  amount  of  dividends  paid ; 


26  INSURANCE  LAWS  OF  CALIFORNIA. 

3.  The  amount  of  expenses  paid,  including  commissions  and  fees  to 
agents  and  officers  of  the  company ; 

4.  The  amount  paid  for  taxes ; 

5.  The  amount  of  all  other  payments  and  expenditures. 
Sixth — 1.  The  amount  of  risks  written  during  the  year; 

2.  The  amount  of  risks  expired  during  the  year ; 

3.  The  amount  of  risks  written  during  the  year  in  the  State  of  Cali- 
fornia ; 

4.  The  amount  of  premiums  thereon ; 

Provided,  that  any  foreign  fire,  marine,  or  inland  insurance  company, 
incorporated  or  not  incorporated,  doing  business  within  this  state,  shall 
return  only  the  business  done  in  the  United  States  and  the  assets  of  the 
company  situated  in  the  United  States  and  held  for  the  protection  of 
the  policyholders  of  the  company  who  are  residents  of  the  United  States, 
except  that  any  further  returns  requested  from  time  to  time  by  the 
insurance  commissioner  must  be  made. 

Enacted  March  12,  1872.  Amended,  Stats.  1877-78,  p.  15 ;  1887,  p.  9. 
Repealed  and  present  section  enacted,  Stats.  1907,  p.  155. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-19. 
Statements  of  life,  health  and  accident  companies. 

Sec.  613.  Such  statement,  if  made  by  life,  health,  and  accident  com- 
panies, must  show: 

Capital. 

First — The  amount  of  the  capital  stock  of  the  company. 

Assets. 

Second — The  property  or  assets  held  by  the  company,  specifying: 
(1)  The  value  of  the  real  estate  held  by  the  company;  (2)  The  amount 
of  cash  on  hand  and  deposited  in  banks  to  the  credit  of  the  company, 
specifying  the  same;  (3)  The  amount  of  loans  secured  by  bond  and 
mortgage  on  real  estate,  specifying  the  same;  (4)  Amount  of  loans 
secured  by  pledge  of  bonds,  stocks,  or  other  marketable  securities  as 
collateral,  specifying  the  same;  (5)  Cash  market  value  of  all  stocks  and 
bonds  owned  by  the  company,  specifying  the  same;  (6)  Interest  due  the 
company  and  unpaid;  (7)  Interest  accrued,  but  not  due;  (8)  Premium 
notes  and  loans  in  any  form  taken  in  payment  of  premiums  on  policies 
now  in  force;  (9)  Gross  amount  of  premiums  in  process  of  collection 
and  transmission  on  policies  in  force;  (10)  Gross  amount  of  deferred 
premiums;  (11)  All  other  assets,  specifying  the  same. 

Liabilities. 

Third — (1)  Claims  for  death  losses  and  matured  endowments  due  and 
unpaid;  (2)  Claims  for  death  losses  and  matured  endowments  in  process 
of  adjustment  or  adjusted  and  not  due;  (3)  Claims  resisted  by  the 
company;  (4)  Amounts  due  and  unpaid  on  annuity  claims;  (5)  Trust 
funds  on  deposit  or  net  present  value  of  all  outstanding  policies,  com- 
puted according  to  the  American  Experience  Table  of  Mortality,  with 
interest  at  the  rate  of  four  and  one  half  per  cent  per  annum  upon  all 
outstanding  risks  written  prior  to  January  1st,  1892,  and  according  to 
the  Combined  Experience  or  Actuaries '  Table  of  Mortality  with  interest 
at  the  rate  of  four  per  cent  per  annum  upon  all  outstanding  risks  written 
from  and  after  the  31st  day  of  December,  1891,  up  to  and  including  the 
31st  day  of  December,  1907,  and  according  to  the  American  Experience 
Table  of  Mortality  with  interest  at  the  rate  of  three  and  one  half 
per  cent  per  annum  upon  all  outstanding  risks  written  from  and  after 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  27 

December  31st,  1907;  (6)  Additional  trust  fund  on  deposit,  or  net 
present  value  of  extra  and  special  risks,  including  those  on  impaired 
lives ;  (7)  Amount  of  all  unpaid  dividends  of  surplus  percentage  bonuses, 
and  other  description  of  profits  to  policyholders,  and  interest  thereon; 
(8)  Amount  of  any  other  liability  to  policyholders  or  annuitants  not 
included  above. 

Income. 

Fourth — (1)  Cash  received  for  premiums  on  new  policies  during  the 
year;  (2)  Cash  received  for  renewal  of  premiums  during  the  year; 
(3)  Cash  received  for  purchase  of  annuities;  (4)  Cash  received  for  all 
other  premiums;  (5)  Cash  received  for  interest  on  loans,  specifying  the 
same;  (6)  Rents  received;  (7)  Cash  received  from  all  other  sources, 
specifying  the  same;  (8)  Gross  amount  of  notes  taken  on  account  of 
new  premiums;  (9)  Gross  amount  of  notes  taken  on  account  of  renewal 
premiums. 

Expenditures. 

Fifth — (1)  Cash  paid  for  losses ;  (2)  Cash  paid  to  annuitants ;  (3)  Cash 
paid  for  lapsed,  surrendered,  and  purchased  policies;  (4)  Cash  paid 
for  dividends  to  policyholders;  (5)  Cash  paid  for  dividends  to  stock- 
holders ;  (6)  Cash  paid  for  reinsurances ;  (7)  Commission  paid  to  agents ; 
(8)  Salaries  and  other  compensation  of  officers  and  employes,  except 
agents  and  medical  examiners;  (9)  Medical  examiners'  fees  and  salaries; 
(10)  Cash  paid  for  taxes;  (11)  Cash  paid  for  rents;  (12)  Cash  paid  for 
commuting  commissions;  (13)  All  other  cash  payments. 

Sixth — Balance  sheet  of  premium  note  account. 

Seventh — Balance  sheet  of  all  the  business  of  the  company. 

Eighth — (1)  Total  amount  of  insurance  effected  during  the  year  on 
new  policies;  (2)  Total  amount  of  insurance  effected  during  the  year  in 
the  State  of  California ;  (3)  Premiums  received  during  the  year  on  busi- 
ness done  in  the  State  of  California. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  157. 

Mutual  companies. 

Sec.  614.  Mutual  companies  formed,  existing,  and  doing  business 
under  an  act  entitled  ' '  An  act  to  provide  for  the  incorporation  of  mutual 
insurance  companies,"  passed  April  twenty-sixth,  eighteen  hundred  and 
fifty-one,  may  report  their  approved  stock  as  capital  paid  up,  and  such 
notes  for  all  purposes  must  be  deemed  part  of  the  paid-up  capital  stock 
of  such  corporation. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  159. 

Furnishing  statement  forms. 

Sec.  615.  The  insurance  commissioner  must  cause  to  be  prepared, 
and  furnish  on  demand  to  each  of  the  companies  printed  forms  of  the 
statements  herein  required;  and  he  may  make  such  changes  from  time 
to  time  in  the  form  of  such  statements  and  reports  as  seems  to  him  best 
adapted  to  elicit  from  the  companies  a  true  exhibit  of  their  condition. 
The  same  forms  must  be  so  furnished  on  demand  to  all  companies 
engaged  in  the  same  kind  of  business. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  159. 


28  INSURANCE  LAWS  OF  CALIFORNIA. 

Designation  of  principal  agent  and  stipulation  for  service  of  papers. 

Sec.  616.  The  insurance  commissioner  must  require,  as  a  condition 
precedent  to  the  transaction  of  insurance  business  in  this  state  by  any 
foreign  insurance  company,  that  such  company  file  in  his  office  a  writing 
designating  the  name  of  an  agent,  and  his  place  of  business  in  this  state, 
on  whom  any  notice  provided  by  law  or  by  any  insurance  policy,  proof 
of  loss,  summons,  and  other  process  may  be  served  in  all  actions  or  other 
legal  proceeding  against  such  company.  All  notices,  proof  of  loss,  sum- 
mons or  other  process  so  served  give  jurisdiction  over  the  person  of  such 
company.  The  agent  so  appointed  and  designated  shall  be  deemed  in 
law  a  general  agent,  and  must  be  the  principal  agent  of  such  company 
in  this  state;  any  such  foreign  company  shall,  as  a  further  condition 
precedent  to  the  transaction  of  insurance  business  in  this  state,  and  in 
consideration  of  the  privilege  to  transact  such  insurance  business  in  this 
state,  make  and  file  with  the  insurance  commissioner  an  agreement  or 
stipulation,  executed  by  the  proper  authorities  of  such  company,  in  form 
and  substance  as  follows:  The  (giving  name  of  company)  does  hereby 
stipulate  and  agree  that,  in  consideration  of  the  permission  granted  by 
the  State  of  California  to  it  to  transact  insurance  business  in  this  state, 
that  if  at  any  time  said  company  shall  leave  this  state  or  cease  to 
transact  business  in  this  state  or  shall  be  without  an  agent  in  said  state, 
on  whom  any  notice,  proof  of  loss,  summons,  or  other  legal  process  may 
be  served,  then  in  any  action  or  proceeding  arising  out  of  any  business 
or  transactions  which  occurred  in  this  state,  service  of  any  notice  pro- 
vided by  law,  or  insurance  policy,  proof  of  loss,  summons,  or  other  legal 
process  may  be  made  upon  the  insurance  commissioner,  and  that  such 
service  upon  the  commissioner  shall  have  the  same  force  and  effect  as  if 
made  upon  the  company.  Whenever  such  service  of  notice,  proof  of 
loss,  summons,  or  other  legal  process  shall  be  made  upon  the  insurance 
commissioner,  he  must,  within  ten  days  thereafter,  transmit  by  mail, 
postage  paid,  a  copy  of  such  notice,  proof  of  loss,  summons,  or  other 
legal  process  to  the  company,  addressed  to  the  manager,  president,  or 
secretary  thereof  at  its  home  or  principal  office.  The  sending  of  such 
copy  by  the  commissioner  shall  be  a  necessary  part  of  the  service  of  the 
notice,  proof  of  loss,  summons,  or  other  legal  process. 

When  any  notice,  summons,  or  other  legal  process  is  served  upon  the 
insurance  commissioner  pursuant  to  the  provisions  of  this  section,  the 
service  as  to  the  company  shall  be  deemed  complete  at  the  end  of 
sixty  (60)  days  after  the  date  of  the  delivery  of  the  notice,  summons, 
or  other  process  to  the  insurance  commissioner. 

When  any  notice,  provided  by  law  or  by  any  insurance  policy,  is  to 
be  served  on  the  agent  designated,  as  in  this  section  provided,  such 
service  may  be  made  as  provided  in  chapter  V,  part  II,  title  XIV  of  the 
Code  of  Civil  Procedure. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-74,  p.  63 ;  1877-78, 
p.  17.    Repealed  and  present  section  enacted,  Stats.  1907,  p.  159. 

A  motion  to  dismiss  an  appeal  upon  the  ground  that  the  undertaking  on  appeal 
was  executed  by  the  American  Surety  Company,  a  foreign  corporation,  which  had 
failed  to  file  with  the  secretary  of  state  a  designation  of  some  person  residing  in  this 
state  upon  whom  service  of  summons  may  be  made,  as  required  by  the  act  of  April  1, 
1872  (Stats.  1871-72,  p.  826),  was  denied,  because  it  appeared  from  the  certificate 
of  the  insurance  commissioner  that  the  company  was  duly  authorized  to  transact 
business  in  this  state,  section  1056  of  the  Code  of  Civil  Procedure  providing  that 
he  should  have  the  same  jurisdiction  over  such  companies  as  he  had  over  others. 
(Gutzeil  vs.  Pennie,  95  Cal.  598.) 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  29 

To  the  same  effect  is  the  case  of  Harrigan  vs.  Home  Life  Insurance  Company, 
1^8  Cal    540 
"  See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-420. 

A  foreign  insurance  company  which,  in  compliance  with  the  laws  of  the  state 
appoints  an  agent  therein  upon  whom  service  may  be  made  distinctly  agrees  with 
the  people  of  the  state  that  summons  and  other  process  may  be  served  upon  it  in  all 
actions  or  legal  proceedings  against  the  company,  and  that  all  process  so  served  gives 
jurisdiction  over  the  person  of  the  company.  For  all  purposes  of  legal  proceedings 
the  company  is.  therefore,  an  "inhabitant"  of  the  state.  (Shainwald  vs.  Davids  et  al., 
69  Fed.  Rep.  704.)  .       ,  .  '     .       _ 

A  foreign  insurance  company  doing  busines  in  the  state,  may  be  served  witn 
process  under  Code  of  Civ.  Proc,  sec.  411,  subd.  2,  which  provides  generally  for 
serving  foreign  corporations,  or  service  may  be  made  under  sec.  616  of  the  Pol.  Code, 
if  it  has  filed  with  the  insurance  commissioner  the  name  of  its  agent  upon  whom 
process  may  be  served  and  an  agreement  that,  should  it  at  any  time  be  without  such 
agent  process  against  it  may  be  served  on  the  commissioner,  but  substituted  service 
on  the  commissioner  is  authorized  only  when  the  company  is,  by  resignation,  revoca- 
tion, or  otherwise,  without  the  agent  specified  in  the  latter  section.  {Buckingham  & 
Hecht  vs.  North  German  Fire  Insurance  Company  of  New  York,  149  Fed.  Rep.  622.) 

It  is  apparent  from  the  nature  of  this  section  that  in  so  far  as  the  appointment  of 
agent  in  this  state  is  concerned,  the  same  is  subject  to  revocation  or  substitution  at 
any  time  by  the  company,  and  that  an  appointment  once  made  by  the  company  con- 
tinues until  revocation  of  the  same  is  made  irrespective  of  the  number  of  years  such 
company  continues  in  business.  The  stipulation  by  its  terms  continues  during  the 
time  such  company  transacts  and  after  such  company  ceases  to  transact  insurance 
business  in  this  state.  It  is  an  irrevocable  contract  entered  into  with  the  state  and 
covers  both  the  period  during  which  such  company  may  enjoy  a  license  and  all  time 
thereafter.  It  furthermore  covers  any  period  when  such  company  may  be  without 
the  agent  in  the  state  contemplated  by  the  section :  Opinion  of  the  Attorney  General, 
June  30,  1908. 

Penalty  for  failure  to  file  statements. 

Sec.  617.  The  commissioner  must  collect  the  sum  of  one  hundred 
dollars  from  any  company  engaged  in  the  business  of  insurance  in  this 
state,  for  a  wilful  failure  to  make  and  file  in  his  office  within  the  time 
prescribed  by  law,  any  statements  or  stipulations  required  by  this  title, 
and  an  additional  penalty  of  two  hundred  dollars  for  each  and  every 
month  or  fractional  part  of  a  month  thereafter,  that  such  company 
continue  to  transact  the  business  of  insurance  until  such  statements  and 
stipulations  are  filed. 

Enacted  March  12,  1872.  Amended,  Stats.  1873-4,  p.  65 ;  1877-8,  p.  18 ; 
1887,  p.  11.    Repealed  and  present  section  enacted,  Stats.  1907,  p.  160. 

A  company  which  has  written  no  new  business  during  the  preceding  year  and 
which  has  ceased  writing  business  in  the  state  is  not  subject  to  the  penalty  prescribed 
by  section  617  of  the  Political  Code  for  failing  to  file  its  annual  statement:  Opinion 
of  the  Attorney  General,  June  14,  1909. 

General  provisions  for  deposits. 

Sec.  618.  Whenever  the  laws  of  any  state  of  the  United  States,  or  of 
any  country  foreign  to  the  United  States,  require  any  insurance  com- 
pany organized  under  the  laws  of  this  state,  to  deposit  with  some  officer 
of  this  state  securities  in  trust  for,  and  for  the  benefit  of,  the  policy- 
holders of  such  company,  as  a  prerequisite  to  transacting  insurance 
business  in  such  other  state  or  foreign  country,  and  whenever  under 
any  laws  of  this  state  any  insurance  company  is  required  to  deposit  with 
any  officer  of  this  state  securities  in  trust  for,  and  for  the  benefit  of 
policyholders  of  such  company,  the  insurance  commissioner  of  this  state 
must  receive  from  such  company  securities  in  the  amount  required  by 
the  law  under  which  such  deposit  is  made  on  deposit  and  in  trust  for 
the  policyholders  of  such  company.  None  of  such  securities  so  deposited 
must  be  estimated  above  the  par  value  of  the  same,  nor  above  their 
market  value.  The  insurance  commissioner  must,  upon  the  receipt  of 
such  securities,  forthwith  make  a  special  deposit  of  the  same  in  the  state 


30  INSURANCE  LAWS  OP  CALIFORNIA. 

treasury,  in  packages  marked  with  the  name  of  the  company  from  whom 
received,  where  they  must  remain  as  security  for  policyholders  in  the 
company  to  whom  they  respectively  belong ;  but  so  long  as  the  company 
continues  solvent  he  must  permit  it  to  collect  the  interest  or  dividends 
on  the  securities  so  deposited,  and  from  time  to  time  to  withdraw  any 
such  securities  on  depositing  other  securities  in  the  stead  of  those  to  be 
withdrawn.  Such  new  securities  to  be  of  the  same  value  and  character 
mentioned  in  this  section,  but  such  securities  must  not  be  withdrawn 
from  the  state  treasury  unless  upon  the  written  order  of  the  company 
making  the  deposits,  which  order  must  be  indorsed  by  the  commissioner, 
or  upon  the  order  and  authority  of  some  court  of  competent  jurisdiction. 
If  the  deposit  is  of  mortgages,  it  shall  be  accompanied  by  full  abstracts 
of  title  or  policies  of  title  insurance  or  certificates  of  title  issued  by  a 
duly  organized  title  insurance  company  authorized  to  transact  business 
under  the  laws  of  California,  and  the  fees  for  examination  of  title,  unless 
accompanied  by  such  certificates  of  title  or  policies  of  title  insurance, 
and  the  fees  for  appraisal  of  property  shall  be  paid  by  the  company 
making  the  deposit.  If  the  deposit  is  of  stocks  or  bonds,  it  shall  be 
accompanied  by  the  fees  necessary  for  the  appraisal  thereof. 

Enacted  March  12,  1872.    Amended,  Stats.  1877-78,  p.  18.    Repealed 
and  present  section  enacted,  Stats.  1907,  p.  160.    Amended,  Stats.  1909, 
p.  909. 
Certificate  of  deposit. 

Sec.  619.  Whenever  an  insurance  company  has  deposited  with  the 
commissioner  the  requisite  security,  in  conformity  with  the  requirements 
of  the  preceding  section,  the  commissioner  must  issue  to  such  company 
a  certificate,  under  his  official  seal,  of  such  deposit,  for  each  state  or 
country  requiring  the  same,  which  said  certificate  must  state  the  items 
and  amount  of  securities  so  deposited,  and  that  they  are  of  the  value 
therein  represented. 

Enacted  March  12,  1872.     Amended  Stats.  1877-8,  p.  19.     Repealed 
and  present  section  enacted,  Stats.  1907,  p.  161. 
Withdrawal  of  deposit. 

Sec.  620.  Whenever  any  insurance  company  so  depositing  securities 
with  the  commissioner  has  paid,  canceled,  or  reinsured  all  its  unexpired 
policies  outstanding  in  the  state,  satisfactorily  to  the  insurance  commis- 
sioner, and  all  its  liabilities  under  such  policies  are  extinguished,  or 
assumed  by  other  responsible  companies  or  corporations,  then,  if  on 
application  of  such  company,  duly  verified,  and  from  an  examination 
of  the  books  of  the  company,  and  of  its  officers  under  oath,  the  insurance 
commissioner  is  satisfied  that  all  of  its  policies  are  so  paid,  canceled, 
extinguished,  or  reinsured,  he  must  deliver  up  to  the  company  the 
securities  deposited ;  provided,  however,  that  pending  such  examination 
the  securities  requested  to  be  withdrawn  may  at  the  discretion  of  the 
commissioner  be  delivered  to  the  depositor  upon  the  condition  that  the 
applicant  deposit  with  the  commissioner  securities  of  like  value;  and 
whenever  the  laws  of  any  other  state  or  country,  by  reason  of  which 
section  622  of  the  Political  Code  of  this  state  is  brought  into  force,  shall 
be  repealed  and  abrogated,  then  any  deposit  which  shall  have  been  made 
with  the  commissioner,  under  and  by  reason  of  said  section  622  of  the 
Political  Code,  must  be  delivered  up  to  the  company  making  the  deposit. 

Enacted  March  12,  1872.  Amended  Stats.  1877-8,  p.  19.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  161. 


INSURANCE  COMMISSIONER POWERS  AND  DUTIES.  31 

Annual  examination  of  securities. 

Sec.  621 — The  commissioner  must  make  an  annual  examination  of  the 
securities  received  by  him  from  each  insurance  company,  and  if  it  appear 
at  any  time  that  the  securities  deposited  by  any  such  company  amount 
to  less  than  the  sum  required  for  the  purposes  for  which  the  deposit  was 
made,  he  must  notify  the  company  thereof,  and  unless  the  deficiency  is 
made  up  within  thirty  days  after  notice,  the  commissioner  must  revoke 
the  certificate  of  authority  previously  granted  and  countermand  all  the 
certificates  he  may  have  issued  to  the  company  under  this  chapter,  and 
give  notice  thereof  to  the  officers  of  the  several  states  to  whom  the  cer- 
tificate may  have  been  transmitted. 

Enacted  March  12,  1872.    Amended,  Stats.  1877-8,  p.  19.     Repealed 
and  present  section  enacted,  Stats.  1907,  p.  161. 
Applying  foreign  discrimination  law. 

Sec.  622.  When  by  the  laws  of  any  other  state  or  country,  any  taxes, 
fines,  penalties,  licenses,  fees,  deposits  of  money  or  of  securities,  or  other 
obligations  or  prohibitions,  are  imposed  on  insurance  companies  of  this 
state  doing  business  in  such  other  state  or  country,  or  upon  their  agents 
therein,  in  excess  of  such  taxes,  fines,  penalties,  licenses,  fees,  deposits 
of  securities,  or  other  obligations  or  prohibitions,  imposed  upon  insurance 
companies  of  such  other  state  or  country,  so  long  as  such  laws  continue 
in  force,  the  same  obligations  and  prohibitions  of  whatsoever  kind  must 
be  imposed  upon  insurance  companies  of  such  other  state  or  country 
doing  business  in  this  state.  And  whenever  under  this  section  any 
deposit  of  security  shall  be  made  in  this  state,  such  deposit  shall  be  made 
in  bonds  of  the  United  States  Government,  or  in  those  of  the  State  of 
California,  or  in  interest-bearing  bonds  of  any  of  the  countries  or  incor- 
porated cities  and  towns  of  the  State  of  California,  not  in  default  for 
interest  on  such  bonds,  which  said  securities  must  be  estimated  at  not 
exceeding  their  par  value  nor  their  market  value. 

Enacted  March  12, 1872.  Amended,  Stats.  1873-4,  p.  11 ;  1877-8,  p.  22 ; 
1897,  p.  242.    Repealed  and  present  section  enacted,  Stats.  1907,  p.  162. 

When  the  act  of  March  3,  1885  (Stats.  1885,  p.  15),  was  passed  requiring  the 
payment  of  certain  premiums  to  counties  and  cities  and  counties  by  fire  insurance 
companies  not  organized  under  the  laws  of  California,  the  conditions  on  which  such 
foreign  corporations  could  do  business  were  prescribed,  and  very  full  provision  had 
been  made  by  the  Political  Code,  sections  622-624,  and  the  legislature  had  no  power  to 
impose  the  premiums  mentioned,  as  the  same  do  not  constitute  a  condition  precedent 
to  their  right  to  do  business  in  this  state,  but  on  the  contrary,  by  a  special  law  a 
tax  is  created  upon  these  corporations,  alone,  discriminatory  in  its  nature,  and  conse- 
quently unconstitutional.    (San  Francisco  vs.  Liverpool,  L.  &  G.  Ins.  Co.,  74  Cal.  113.) 

See  Liverpool,  London  &  Globe  Insurance  Company  et  al.  vs.  Clunie,  88  Fed. 
Rep.  1G0-176. 

Tax. 

Sec.  622a.  Every  insurance  company  other  than  life,  not  organized 
or  incorporated  under  the  laws  of  California,  and  doing  business  in 
this  state,  and  every  other  insurance  company  other  than  life,  whose 
charter  may  be  owned,  or  a  majority  of  whose  stock  may  be  controlled, 
or  whose  business  may  be  carried  on  in  the  interest,  or  for  the  benefit 
of  any  insurance  company  or  association  not  organized  or  incorporated 
under  the  laws  of  California,  shall  annually  pay  to  the  insurance  com- 
missioner, for  the  state,  a  tax  of  two  (2)  per  cent  upon  the  amount  of 
the  gross  premiums  received  upon  its  business  done  in  the  state,  during 
the  year  ending  on  the  preceding  thirty-first  day  of  December,  less 
return  premiums,  reinsurance  in  companies  authorized  to  do  business 


32  INSURANCE  LAWS  OF  CALIFORNIA. 

in  this  state,  and  losses  actually  paid  on  its  business  in  this  state,  and 
every  life  insurance  company  not  organized  or  incorporated  under  the 
laws  of  California,  which  does  business  or  collects  premiums  or  assess- 
ments in  the  state,  shall  annually  pay  to  the  insurance  commissioner,  for 
the  state,  a  tax  of  one  per  cent  upon  the  amount  of  the  gross  premiums 
received  upon  its  business  done  in  this  state  duing  the  year  ending  on 
the  preceding  thirty-first  day  of  December.  This  section  shall  not  be 
held  or  construed  so  as  to  relieve  any  company  or  organization  from  any 
tax,  fee  or  other  obligation  or  charge  imposed  upon  it  by  the  provisions 
of  section  622  of  this  code,  and  whenever  the  taxes  imposed  by  the  appli- 
cation of  section  622  exceed  those  imposed  by  the  application  of  this 
section  the  provisions  of  the  former  section  shall  prevail. 
'  Enacted,  Stats.  1903,  p.  359.  Amended,  Stats.  1905,  p.  136.  Repealed 
and  present  section  enacted,  Stats.  1907,  p.  162. 

See,  post,  section  3  of  act  to  carry  into  effect  the  provisions  of  section  fourteen  of 
article  thirteen  of  the  constitution,  etc.,  approved  April  1,  1911. 

The  use  of  the  words  "its  business"  found  in  the  statute  above  cited,  undoubtedly 
comprehends  all  of  the  classes  of  insurance  which  the  corporation  is  licensed  to 
transact,  and  in  estimating  the  tax  for  which  each  company  is  liable,  I  am  of  the 
opinion  that  the  tax  is  to  be  estimated  upon  the  aggregate  of  the  gross  premiums 
received  by  the  company  from  all  of  the  branches  or  classes  of  insurance  that  it 
transacts:  Opinion  of  the  Attorney  General,  September  3,  1908. 

Bond  of  company. 

Sec.  623.  The  commissioner  must  require  every  company,  not  incor- 
porated under  the  laws  of  this  state,  now  transacting  or  proposing  to 
transact  insurance  business  by  agent  or  agents  in  this  state,  before  com- 
mencing such  business  to  file  in  his  office  a  bond  in  favor  of  the  people 
of  the  State  of  California,  to  be  signed  by  the  company,  as  principal, 
with  two  sureties,  to  be  approved  by  the  commissioner,  in  the  penal  sum 
of  twenty  thousand  dollars,  the  condition  of  such  bonds  to  be  as  follows : 
(1)  That  the  company  and  its  agents  will  pay  all  state,  county,  and 
municipal  property  and  license  taxes,  in  the  manner  and  at  the  time 
prescribed  by  law;  (2)  that  the  company  named  therein  will  conform 
to  all  the  provisions  of  the  revenue  and  other  laws  made  to  govern  them ; 
(3)  and  that  the  company  will  promptly  pay  all  fees,  assessments,  taxes, 
penalties,  and  fines  that  may  be  laid  upon  or  against  such  company. 
Such  bonds  may  be  sued  on  in  the  same  manner  and  shall  be  subject 
to  the  same  rules  governing  official  bonds. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

See  Commercial  Union  Assurance  Company  vs.  Wolf,  8  Cal.  App.  413-16 ;  Liver- 
pool, London  &  Globe  Insurance  Company  et  al.  vs.  Clunie,  88  Fed.  Rep.  160-166-173. 

The  bond  must  be  given  "before  commencing  such  business"  lives  and  dies  with 
the  term  of  the  license  to  which  it  related  and  upon  which  it  is  predicated,  and  that 
upon  a  renewal  of  the  license  there  must  be  a  renewal  of  the  bond  required  by  section 
623  of  the  Political  Code :  Opinion  of  the  Attorney  General,  June  30,  1908. 

Bond  containing  proper  continuation  clause,  making  such  bond  applicable  alike  to 
the  first  and  all  subsequent  license  periods  for  which  renewals  of  certificates  of 
authority  are  issued,  is  held  to  cover  subsequent  license  periods  without  a  renewal 
of  such  bond. 

Separate  bonds. 

Sec.  624.  Whenever  the  same  company  desires  to  collect  premiums 
of  insurance  for  more  than  one  company,  the  commissioner  must 
require  a  separate  bond,  as  provided  in  the  preceding  section,  for  each 
company  so  represented  by  such  company. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

San  Francisco  vs.  Liverpool,  London  &  Globe  Insurance  Company,  74  Cal.  113. 
See  note  to  section  622,  Political  Code,  ante. 


INSURANCE    COMMISSIONER — POWERS  AND   DUTIES.  33 

Furnishing  information  to  assessors. 

Sec.  625.  The  commissioner  must,  before  the  commencement  of  each 
fiscal  year  as  fixed  in  the  revenue  laws,  furnish  the  assessor  of  the 
county  in  which  the  principal  office  of  any  company  doing  business  of 
insurance  is  situated,  all  the  data  concerning  premiums  collected  by  and 
all  other  necessary  information  in  relation  to  the  business  of  such  com- 
pany as  will  assist  the  assessor  in  the  performance  of  his  duties. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

Listing  surety  companies  to  county  clerks. 

Sec.  625a.  The  insurance  commissioner  of  the  State  of  California 
must  make  up  and  certify  to  the  county  clerk  of  each  county  of  this 
state  a  complete  list  of  all  corporations  engaged  in  the  business  of 
making,  guaranteeing  or  becoming  a  surety  upon  bonds  or  undertakings 
required  or  authorized  by  law,  holding  certificates  of  authority  to  trans- 
act such  business  in  this  state,  which  list  shall  set  forth : 

(1)  The  full  corporate  name  of  such  corporation; 

(2)  The  name  of  the  state,  territory  or  country  under  whose  laws 
such  corporation  is  organized; 

(3)  The  date  of  the  certificate  of  authority  issued  to  such  corporation 
to  transact  such  a  business  in  this  state. 

From  and  after  the  date  when  the  list  aforesaid  shall  have  been  certi- 
fied as  hereinbefore  provided,  the  said  insurance  commissioners  shall 
likewise  certify  to  the  county  clerk  of  each  county  of  this  state,  the  same 
facts  concerning  any  other  corporation  thereafter  authorized  to  transact 
such  business  in  this  state. 

Whenever  the  certificate  of  authority  of  any  such  corporation  to  do 
business  in  this  state  shall  for  any  reason  be  surrendered,  revoked,  can- 
celed, or  annulled,  or  whenever  the  said  certificate  of  any  such  corpora- 
tion has  been  suspended  as  provided  in  section  1056  of  the  Code  of  Civil 
Procedure  of  this  state,  or  whenever  any  such  corporation  whose  certifi- 
cate of  authority  has  been  so  suspended,  again  becomes  authorized  in 
law  to  do  business  in  this  state  under  such  certificate  of  authority,  the 
insurance  commissioner  of  this  state  shall  forthwith  certify  to  the 
county  clerk  of  each  county  of  this  state,  the  name  of  such  corporation, 
and  the  date  of  such  surrender,  revocation,  cancellation,  annulment  or 
suspension,  or  of  renewed  authority  to  act  under  such  certificate. 

Enacted,  Stats.  1907,  p.  977. 
Complying  with  Civil  Code. 

Sec.  626.  The  commissioner  must  require  from  every  company, 
before  and  after  engaging  in  the  business  of  insurance,  a  full  compliance 
with  all  the  provisions  of  title  two,  part  four,  division  one,  of  the  Civil 
Code  applicable  thereto ;  and  every  company  neglecting  to  comply  with 
such  requirements  is  subject  to  the  fines  and  penalties  therein  prescribed. 

Enacted  March  12,  1872.  Repealed  and  present  action  enacted, 
State.  1907,  p.  163. 

See  Civil  Code,  section  414-450,  post. 
Computations  and  payments  on  gold  basis. 

Sec.  627.  All  statements,  estimates,  percentages,  payments,  and  cal- 
culations, required  by  this  chapter  to  be  made,  either  by  the  commis- 


-IN 


34  INSURANCE  LAWS  OF  CALIFORNIA. 

sioner  or  companies,  must  be  made  on  the  basis  of  gold  coin  of  the  United 
States. 

Enacted  March  12,  1872.  Repealed  and  present  section  enacted, 
Stats.  1907,  p.  163. 

Special  valuation  of  policies  of  life  insurance  companies. 

Sec.  628.  When  the  certificate  of  the  insurance  commissioner  of  this 
state,  of  the  valuation  of  the  policies  of  a  life  insurance  company,  as  pro- 
vided in  the  next  section  of  this  code,  issued  to  any  company  organized 
under  the  laws  of  this  state,  shall  not  be  accepted  by  the  insurance 
authorities  of  any  other  state,  in  lieu  of  a  valuation  of  the  same,  by  the 
insurance  officer  of  such  other  state,  then  every  company  organized 
under  the  laws  of  such  other  state  doing  business  in  this  state,  shall  be 
required  to  have  a  separate  valuation  of  its  policies  made  under  the 
authority  of  the  insurance  commissioner  of  this  state,  as  provided  in 
the  next  section. 

Enacted,  Stats.  1907,  p.  163.    Formerly  section  449,  Civil  Code. 

Old  section  628,  Pol.  Code,  is  now  numbered  589. 

General  valuation  of  policies  of  life  insurance  companies. 

Sec.  629.  Every  life  insurance  corporation  organized  under  the  laws 
of  this  state  must,  on  or  before  the  first  day  of  February  of  each  year, 
furnish  the  insurance  commissioner  the  necessary  data  for  determining 
the  valuation  of  all  its  policies  outstanding  on  the  thirty-first  day  of 
December  then  next  preceding.  And  every  life-insurance  company 
organized  under  the  laws  of  any  other  state  or  country,  and  doing  busi- 
ness in  this  state,  must,  upon  the  written  requisition  of  the  commissioner, 
furnish  him,  at  such  time  as  he  may  designate,  the  requisite  data  for 
determining  the  valuation  of  all  its  policies  then  outstanding;  such 
valuations  must  be  based  upon  the  rate  of  mortality  established  by  the 
American  Experience  Life  Table,  and  interest  at  four  and  one  half  per 
cent  per  annum  on  all  outstanding  risks  written  prior  to  January  first, 
eighteen  hundred  and  ninety-two,  and  such  valuations  must  be  based 
upon  the  rate  of  mortality  established  by  the  Combined  Experience  or 
Actuaries '  Table  of  Mortality  with  interest  at  the  rate  of  four  per  cent 
per  annum  on  all  outstanding  risks  written  from  and  after  the  thirty- 
first  day  of  December,  A.  D.  one  thousand  eight  hundred  and  ninety-one, 
up  to  and  including  the  thirty-first  day  of  December  one  thousand  nine 
hundred  and  seven,  and  such  valuations  must  be  based  upon  the  rate  of 
mortality  established  by  the  American  Experience  Table  of  Mortality 
with  interest  at  the  rate  of  three  and  one  half  per  cent  per  annum  on  all 
outstanding  risks  written  from  and  after  December  thirty-first,  nine- 
teen hundred  and  seven.  "When  the  laws  of  any  other  state  or  territory 
require  of  a  life  insurance  company  organized  under  the  laws  of  this 
state  a  valuation  of  its  outstanding  policies  by  any  standard  of  valuation 
different  from  that  named  in  this  section,  the  insurance  commissioner 
is  hereby  authorized  to  make  such  valuation  for  use  in  such  other  state 
or  territory,  and  to  issue  his  certificate  in  accordance  therewith.  For 
the  purpose  of  making  the  valuations,  the  insurance  commissioner  is 
authorized  to  employ  a  competent  actuary,  whose  compensation  for  such 
valuations  shall  be  one  cent  for  each  thousand  dollars  of  insurance,  to 
be  paid  by  the  respective  companies  whose  policies  are  thus  valued. 

Enacted,  Stats.  1907,  p.  164.    Formerly  section  447,  Civil  Code. 

Old  section  629,  Pol.  Code,  is  now  numbered  589. 


INSURANCE   COMMISSIONER — POWERS   AND   DUTIES.  35 

Secret  and  fraternal  societies. 

Sec.  630.  Secret  or  fraternal  societies,  lodges,  or  councils  incorpo- 
rated or  organized  for  the  purpose  of  mutual  protection  and  relief  of 
their  members  and  for  the  payment  of  stipulated  sums  of  money  to  their 
members  or  to  the  beneficiaries  of  deceased  members  which  conduct 
their  business  and  secure  membership  on  the  lodge  system  exclusively, 
having  ritualistic  work  and  ceremonies  in  their  societies,  lodges,  or 
councils,  and  all  mutual  or  benefit  associations,  organized  or  formed  and 
composed  of  members  of  any  such  society,  lodge  or  council  exclusively, 
are  exempt  from  the  provisions  of  all  the  insurance  laws  of  this  state. 

Enacted,  Stats.  1907,  p.  164  takes  the  place  of,  although  differing  in 
important  respects  from  section  451,  Civil  Code,  repealed  at  the  same 
time. 

Old  section  630  is  now  numbered  591. 

See  Perkins  vs.  Fish,  121  Cal.  319-321 ;  Marshall  vs.  Grand  Lodge,  A.  O.  V.  W., 
133  Cal.  686 ;  Lyon  vs.  United  Moderns,  148  Cal.  471. 

Reviewing  commissioner's  act. 

Sec.  631.  If  at  any  time  the  insurance  commissioner  revokes  the  cer- 
tificate of  authority  theretofore  granted  to  any  insurance  company,  or 
refuses  to  grant  a  certificate  of  authority  to  any  insurance  company, 
any  interested  person  or  company  may  commence  an  action  against  the 
insurance  commissioner  for  the  purpose  of  reviewing  the  facts  and  the 
law  pertinent  to  the  controversy  and  for  the  purpose  of  obtaining  the 
relief  refused  or  for  concelling  the  action  of  the  commissioner.  In  any 
such  action  the  court  shall  have  full  power  to  investigate  all  the  facts 
de  novo  without  regard  to  the  determinations  previously  made  by  the 
commissioner.  In  the  trial  of  such  actions  all  of  the  provisions  of  the 
Code  of  Civil  Procedure,  not  inconsistent  herewith,  shall  be  applicable. 

Enacted  Stats.  1907,  p.  164. 

Old  section  631,  Pol.  Code,  is  now  numbered  592. 
Publication  of  notice  of  withdrawal. 

Sec.  631a.  Whenever  any  insurance  company  shall  have  withdrawn 
from  business  in  this  state,  and  whenever  for  any  reason  the  insurance 
commissioner  shall  have  revoked  or  cancelled  the  certificate  of  authority 
authorizing  any  insurance  company  to  do  business  in  this  state,  the 
insurance  commissioner  shall  cause  to  be  published,  in  each  of  two  daily 
newspapers,  one  published  in  San  Francisco  and  one  published  in  Sacra- 
mento, a  notice  of  such  revocation  or  of  such  withdrawal.  The  expense 
of  such  publication  shall  be  paid  in  advance  by  the  insurance  company 
withdrawing  or  whose  certificate  shall  have  been  so  revoked. 

Enacted,  Stats.  1907,  p.  165.    Practically  new  section  added  in  1907 ; 
but  see  old  section  595. 
Informing  district  attorneys. 

Sec.  632.  "Whenever  the  insurance  commissioner  ascertains  that  any 
insurance  company,  or  any  of  its  agents,  officers,  or  employees,  or  any 
other  person  has  been  guilty  of  violating  any  of  the  penal  statutes  of  this 
state,  the  commissioner  shall  certify  such  facts  to  the  district  attorney  of 
the  county  in  which  such  offense  was  committed.  Such  offenses  shall  be 
prosecuted  and  tried  in  all  respects  as  provided  in  the  Penal  Code.  For 
the  purpose  of  evidence  the  commissioner  shall  furnish  to  the  district 
attorney,  without  cost  to  the  county,  certified  copies  of  any  papers  or 
records  of  the  office  of  the  commissioner. 

Enacted,  Stats.  1907,  p.  165. 

Old  section  632  is  now  numbered  593. 


36  INSURANCE  LAWS  OF  CALIFORNIA. 

Licensing  agents  and  solicitors. 

Sec.  633.  No  person  shall  in  this  state  act  as  the  agent  or  solicitor  of 
any  insurance  company  doing  business  in  this  state  until  he  has  pro- 
duced to  the  commissioner,  and  filed  with  him,  a  duplicate  power  of 
attorney  from  the  company,  or  its  authorized  agent,  authorizing  him  to 
act  as  such  agent  or  solicitor.  Upon  filing  such  power,  the  commissioner 
shall  issue  a  license  to  him  to  act  as  such  agent  or  solicitor  for  such  com- 
pany, if  such  company  has  received  a  certificate  of  authority  from  such 
commissioner  to  do  business  in  this  state.  Such  license  shall  continue  in 
force  until  July  first  after  the  date  thereof,  but  must  be,  and  shall  be, 
sooner  revoked  upon  application  of  the  company  or  its  authorized  agent. 
Such  license  may  be  renewed  from  time  to  time,  for  an  additional  period 
of  twelve  months,  on  production  by  the  holder  to  the  commissioner  of  a 
certificate  from  the  company  that  such  person's  authority  as  such  agent 
or  solicitor  continues.  The  commissioner  shall  keep  an  alphabetical  list 
of  the  names  of  the  persons  to  whom  such  licenses  shall  be  issued,  with 
the  date  of  the  license  and  renewal,  and  the  name  of  the  company  for 
whom  such  person  is  working. 

Enacted,  Stats.  1873-74,  p.  66.     Amended,  Stats.  1880,  p.  90;  1893, 
p.  116.    Repealed  and  present  section  enacted,  Stats.  1907,  p.  165. 
Registration  of  policies  of  life  insurance  companies. 

Sec.  634.  It  shall  be  lawful  for  any  company  or  corporation  transact- 
ing the  business  of  life  insurance  in  this  state  to  register  with  the  insur- 
ance commissioner  such  of  its  policies  as  may  be  agreed  upon  by  the 
company  and  the  insured;  such  registration  to  consist  in  a  written  or 
printed  list  of  such  policies  filed  with  the  commissioner,  showing  the 
name  and  age  of  the  insured,  number  and  date  of  the  policy,  and  the 
kind  and  amount  of  insurance  in  each  case.  Such  list  must  be  filed  with 
the  commissioner  within  thirty  days  after  the  issuance  of  the  first  regis- 
tered policy ;  and  must  contain  all  such  policies  issued  up  to  the  date  of 
filing.  After  that  date  the  company  must,  within  three  days  after  the 
first  day  of  each  calendar  month,  file  a  statement  embracing  all  its  regis- 
tered policies  issued  since  the  filing  of  its  last  preceding  list.  Upon  filing 
such  lists  of  policies,  from  time  to  time,  the  company  must  deposit  with 
the  commissioner,  as  a  special  deposit  for  the  benefit  of  such  registered 
policies,  securities  of  the  denominations  stated  in  section  421  of  the  Civil 
Code  as  permissible  for  the  investment  of  the  capital  and  accumulations 
of  insurance  companies.  Such  deposit  must  be  in  an  amount  equal  to 
the  full  net  value  of  all  policies  registered  up  to  the  time  of  making  the 
deposit,  and  must  at  all  times  be  equal  to  such  net  value  of  all  registered 
policies.  Upon  receipt  of  such  securities,  the  commissioner  must  imme- 
diately deposit  them  in  the  state  treasury,  in  accordance  with  the  provi- 
sions of  section  618  of  the  Political  Code,  where  they  must  remain  as  a 
special  security  for  the  benefit  of  such  registered  policies.  Such  com- 
pany may  at  any  time  withdraw  any  excess  of  securities  above  the  net 
present  value  hereinbefore  specified,  upon  satisfying  said  commissioner 
by  written  proof  that  such  excess  exists,  and  shall  be  allowed  to  receive 
the  interest  on  all  securities  deposited,  and  to  exchange  such  securities 
by  substituting  other  securities  of  the  character  in  which,  by  the  laws  of 
and  present  section  enacted,  Stats.  1907,  p.  166. 

Enacted,  Stats.  1877-8,  p.  20.  Amended,  Stats.  1905,  p.  151.  Repealed 
this  state,  it  may  invest  its  funds. 

See  Harrigan  vs.  Home  Life  Insurance  Company,  128  Cal.  540. 


OFFICIx\L   BONDS SURETIES.  37 

Definitions  and  exceptions. 

Sec.  634a.  The  word  company  as  used  in  this  title  includes  every 
association,  corporation,  firm  or  person  transacting  or  desiring  to  trans- 
act any  kind  of  insurance  business  under  the  laws  of  the  state  of  Cali- 
fornia ;  provided,  that  no  part  of  this  act  shall  be  held  to  apply  to  any 
company  organized  under  an  act  entitled  "An  act  to  provide  for  the 
organization  and  management  of  county  fire  insurance  companies, ' '  ap- 
proved April  first,  eighteen  hundred  and  ninety-seven,  or  to  any  corpo- 
ration doing  or  transacting  the  business  of  mutual  insurance  on  the 
assessment  plan  as  defined  in  section  453d  of  the  Civil  Code  of  the  State 
of  California.  The  words  "capital  stock"  as  referred  to  in  this  title 
shall  be  deemed  to  include  the  capital  of  any  person,  firm  or  association. 

Enacted,  Stats.  1907,  p.  166. 
Demanding  and  recovering  payments  other  than  fees. 

Sec.  6346.  All  fines,  taxes,  assessments,  and  penalties  provided  for  in 
this  title  shall  be  due  and  payable  on  the  demand  of  the  insurance  com- 
missioner. If  the  same  are  not  paid  within  ten  days  after  such  demand 
is  made,  then  the  insurance  commissioner  shall  institute  an  action  in  the 
name  of  the  people  of  the  State  of  California  for  the  purpose  of  recover- 
ing such  fines,  penalties,  and  taxes,  or  either,  as  the  case  may  be.  All 
such  actions  shall  be  subject  to  all  the  provisions  of  the  Code  of  Civil 
Procedure  which  may  be  applicable  thereto. 

Enacted,  Stats,  1907,  p.  166. 

PART  III.     TITLE  I.     CHAPTER  VII.    ARTICLE  IX. 

BONDS  OF  OFFICERS. 

Sec.  955.     Justification  of  sureties. 

956.     Sureties  for  less  than  the  penal  sum. 

Justification  of  sureties. 

Sec.  955.  The  officer  whose  duty  it  is  to  approve  official  bonds  re- 
quired of  state,  county,  city  and  county,  or  township  officers,  must  not 
accept  or  approve  any  such  bond  unless  each  of  the  sureties  severally 

justify  before  an  officer  authorized  to  administer  oaths  as  follows : 

2      #     #     # 

2  *     *     * 

3  *     =*     # 

4.  A  corporation,  such  as  is  mentioned  in  section  1056  of  the  Code  of 
Civil  Procedure  of  this  State,  may  become  and  shall  be  accepted  as  sole 
and  sufficient  surety  upon  any  bond  or  undertaking  authorized  or  re- 
quired by  the  provisions  of  this  code  or  of  any  law  of  this  state,  subject 
to  the  provisions  of  said  section,  and  those  of  section  1057  of  the  same 
code. 

Enacted,  March  12,  1872.    Amended,  Stats.  1873-4,  p.  72 ;  1889,  p.  220. 

Sureties  for  less  than  the  penal  sum. 

Sec.  956.  When  the  penal  sum  of  any  bond  required  to  be  given, 
amounts  to  more  than  one  thousand  dollars,  the  sureties  may  become  sev- 
erally liable  for  portions  of  not  less  than  five  hundred  dollars  thereof, 
making,  in  the  aggregate,  at  least  two  sureties  for  the  whole  penal  sum. 
And  if  any  such  bond  becomes  forfeited  an  action  may  be  brought 
thereon  against  all  or  any  number  of  the  obligors,  and  judgment  entered 


38  INSURANCE  LAWS  OF  CALIFORNIA. 

against  them,  either  jointly  or  severally,  as  they  may  be  liable.  The 
judgment  must  not  be  entered  against  a  surety  severally  bound  for  a 
greater  sum  than  that  for  which  he  is  specially  liable  by  the  terms  of  the 
bond.  Each  surety  is  liable  to  contribution  to  his  co-sureties  *in  propor- 
tion to  the  amount  for  which  he  is  liable.  Any  corporation,  such  as  is 
mentioned  in  section  955  of  this  code,  may  become  one  of  such  sureties, 
or  be  accepted  as  sole  and  sufficient  surety. 

Enacted,  March  12,  1872.    Amended,  Stats.  1889,  p.  220. 

TITLE  VI.     CHAPTER  I.     ARTICLE  VIII. 

PORT  WARDENS. 

Sec.  2507.     Sales  of  wrecks,  etc.,  and  merchandise  for  foreign  underwriters. 

2508.  Notice  of  sale,  how  given. 

2509.  Wardens  not  to  be  connected  with  insurance. 

Sales  of  wrecks,  etc.,  and  merchandise  for  foreign  underwriters. 

Sec.  2507.  All  wrecked  or  damaged  vessels,  or  materials  from  the 
same,  and  all  merchandise  sold  at  public  auction  for  account  of  under- 
writers residing  abroad,  when  required  by  any  party  having  an  interest 
in  the  same,  or  for  account  of  whom  it  may  concern,  or  upon  which 
claims  are  to  be  made  against  underwriters  residing  abroad,  must  be  sold 
under  the  inspection  of  a  warden  of  the  port  where  such  sale  is  made. 
And  the  warden  must  separate  sound  goods  from  those  damaged  and 
certify  specially  the  nature,  and,  as  far  as  can  be  done,  the  extent  of  such 
damage.  No  port  warden  has  authority  to  sell  or  dispose  of  any  prop- 
erty that  may  have  been  surveyed  by  him  without  the  consent  of  the 
owner  or  agent  of  the  same ;  nor  when  the  settlement  of  losses  has  been 
agreed  upon  in  writing  by  the  parties  interested  and  a  copy  thereof 
given  to  the  warden. 

Enacted  March  12, 1872. 

Notice  of  sale,  how  given. 

Sec.  2508.  In  case  sales  are  made  at  auction  under  the  direction  of 
the  port  warden,  he  must  give  at  least  three  days '  notice  of  the  same  by 
publication  in  some  newspaper  published  in  the  county  where  the  survey 
is  made,  describing  the  articles  to  be  sold ;  and  if  merchandise,  the  vessel 
by  which  imported ;  and  if  a  wrecked  or  damaged  vessel  or  materials  of 
of  the  same,  the  name  of  the  vessel  and  where  from.  If  no  newspaper  is 
published  in  the  place  where  the  sale  is  made,  then  a  written  notice  of 
such  sale  must  be  posted  up  in  the  vicinity. 

Enacted  March  12, 1872. 

Wardens  not  to  be  connected  with  insurance. 

Sec.  2509.  No  port  warden  must,  either  directly  or  indirectly,  have 
any  connection  with  insurers  of  this  state,  or  of  any  other  of  the  states, 
or  of  foreign  countries,  or  with  the  agents  or  representatives  of  such  in- 
surers, so  far  as  his  duties  as  port  warden  are  concerned.  He  must  not 
in  any  manner  be  interested,  directly  or  indirectly,  in  any  repairs  he 
may  recommend,  nor  in  any  vessel,  cargo,  or  portion  of  cargo  he  may  be 
required  to  survey. 

Enacted  March  12,  1872. 


INSURANCE   CORPORATIONS.  39 


CIVIL  CODE. 


DIVISION  I.     PART  IV.    TITLE  I.    CHAPTER  II.     ARTICLE  II. 

ASSESSMENTS  OF  STOCK. 

Sec.  831.     Directors  may  levy  assessments. 
332.     Limitation. 

Directors  may  levy  assessments. 

Sec.  331.  The  directors  of  any  corporation  formed  or  existing  under 
the  laws  of  this  state,  after  one  fourth  of  its  capital  stock  has  been  sub- 
scribed, may,  for  the  purpose  of  paying  expenses,  conducting  business, 
or  paying  debts,  levy  and  collect  assessments  upon  the  subscribed  capital 
stock  thereof,  in  the  manner  and  form,  and  to  the  extent  provided  herein. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-74,  p.  206. 

Limitation. 

Sec.  332.  No  one  assessment  must  exceed  ten  per  cent  of  the  amount 
of  the  capital  stock  named  in  the  articles  of  incorporation,  except  in  the 
cases  in  this  section  otherwise  provided  for,  as  follows : 

2      #     *     # 

2*     *     *     * 

3.  The  directors  of  fire  or  marine  insurance  corporations  may  assess 
such  a  percentage  of  the  capital  stock  as  they  deem  proper. 

Enacted  March  21,  1872. 

TITLE  II. 

INSURANCE  CORPORATIONS. 

Chapter  I.     General  Provisions.     Sees.  414-421. 

II.     Fire,  Marine,  and  Title  Insurance  Corporations.     Sees.  424-432. 

III.  Mutual    Life,    Health,    and    Accident    Insurance    Corporations.      Sees. 

437-452. 

IV.  Mutual  Benefit  and  Life  Associations.     Sees.  452a,  453. 

V.     Corporations    to   Discover   Fire    and    Save   Property   and   Human   Life 
from  Destruction  Thereby.     Sees.  453a-453c. 
VI.     Life,   Health,  Accident,  and  Annuity  or  Endowment  Insurance  on  the 
Assessment  Plan.     Sees.  453d-453|). 

CHAPTER   I. 

GENERAL  PROVISIONS. 

Sec.  414.  Subscriptions  to  capital  stock  opened,  and  how  collected. 

415.  Purchase  and  conveyance  of  real  estate. 

416.  Policies,  how  issued  and  by  whom  signed. 

417.  Dividends,  of  what,  and  when  declared. 

418.  Directors  liable  for  loss  on  insurance  in  certain  cases. 
421.  How  capital  and  accumulations  may  be  invested. 

Subscriptions  to  capital  stock  opened  and  how  collected. 

Sec.  414.  After  the  secretary  of  state  issues  the  certificate  of  incorpo- 
ration, as  provided  in  article  one,  chapter  one,  title  one,  of  this  part,  the 
directors  named  in  the  articles  of  incorporation  must  proceed  in  the  man- 
ner specified,  or  in  their  by-laws,  or  if  none,  then  in  such  manner  as  they 
may  by  order  adopt,  to  open  books  of  subscription  to  the  capital  stock 
then  unsubscribed,  and  to  secure  subscriptions  to  the  full  amount  of  the 
fixed  capital ;  to  levy  assessments  and  installments  thereon,  and  to  collect 
the  same,  as  in  chapter  two  of  title  one  provided. 

Enacted  March  21,  1872. 


40  INSURANCE  LAWS  OF  CALIFORNIA. 

Purchase  and  conveyance  of  real  estate. 

Sec.  415.  No  insurance  corporation  may  purchase,  hold  or  convey 
real  estate,  except  as  hereinafter  set  forth,  to  wit : 

1.  The  building  in  which  it  has  its  principal  office  and  the  land  upon 
which  it  stands. 

2.  Also,  such  as  may  be  requisite  for  its  accommodation  in  the  con- 
venient transaction  of  its  business. 

3.  Also,  such  as  may  be  conveyed  to  it,  or  to  any  person  for  it,  by  way 
of  mortgage,  or  in  trust  or  otherwise,  to  secure  or  provide  for  the  pay- 
ment of  loans  previously  contracted  or  for  moneys  due. 

4.  Also,  such  as  may  be  purchased  at  sales  upon  deeds  of  trust,  or 
judgments  obtained  or  made  for  such  loans  or  debts. 

5.  Also,  such  as  may  be  conveyed  to  it  in  satisfaction  of  debts  pre- 
viously contracted  in  the  course  of  its  dealings. 

All  such  real  estate,  mentioned  in  subdivisions  three,  four  and  five  so 
acquired,  which  is  not  requisite  for  the  accommodation  of  such  corpora- 
tion in  the  transaction  of  its  business,  must  be  sold  and  disposed  of 
within  five  years  after  such  corporation  acquired  title  to  the  same. 

Enacted  March  21,  1872.    Amended,  Stats.  1905,  p.  21. 

Policies,  how  issued  and  by  whom  signed. 

Sec.  416.  All  policies  made  by  insurance  corporations  must  be  sub- 
scribed by  the  president  or  vice-president,  or  in  case  of  the  death, 
absence,  or  disability  of  those  officers,  by  any  two  of  the  directors,  and 
countersigned  by  the  secretary  of  the  corporation.  All  such  policies  are 
as  binding  and  obligatory  upon  the  corporation  as  if  executed  over  the 
corporate  seal. 

Enacted  March  21,  1872. 

Dividends,  of  what,  and  when  declared. 

Sec.  417.  The  directors  of  every  insurance  corporation,  at  such  times 
as  their  by-laws  provide,  must  make,  declare,  and  pay  to  the  stockholders 
dividends  of  so  much  of  the  net  profits  of  the  corporate  business  and 
interest  on  capital  invested  as  to  them  appears  advisable ;  but  the  moneys 
received  and  notes  taken  for  premium  on  risks  which  are  undetermined 
and  outstanding  at  the  time  of  making  the  dividend  must  not  be  treated 
as  profits,  nor  divided,  except  as  provided  in  chapter  two  of  this  title. 

Enacted  March  21,  1872. 

Directors  liable  for  loss  on  insurance  in  certain  cases. 

Sec.  418.  If  any  insurance  corporation  is  under  liabilities  for  losses 
to  an  amount  equal  to  its  capital  stock,  and  the  president  or  directors, 
after  knowing  the  same,  make  any  new  or  further  insurance,  the  estates 
of  all  who  make  such  insurance,  or  assent  thereto,  are  severally  and 
jointly  liable  for  the  amount  of  any  loss  which  takes  place  under  such 
insurance. 

Enacted  March  21,  1872. 

How  capital  and  accumulations  may  be  invested. 

Sec.  421.  Companies  organized  under  the  laws  of  this  state  for  the 
transaction  of  business  in  any  kind  of  insurance  may  invest  their  capital 
and  accumulations  in  the  following  named  securities : 

1.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  the 
United  States  government. 


INSURANCE    CORPORATIONS.  41 

2.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  states  of  the  United  States,  not  in  default  for  interest  on  such  bonds. 

3.  In  the  purchase  of,  or  loans  upon  interest-bearing  bonds  of  any  of 
the  counties  and  incorporated  cities  and  towns  and  duly  organized  school 
districts  of  any  state  or  territory  of  the  United  States  not  in  default  for 
interest  on  such  bonds. 

4.  In  loans  upon  unencumbered  real  property,  no  loan  to  exceed  sixty 
per  cent  of  the  market  value  of  any  piece  of  real  estate  to  be  taken  as 
security. 

5.  Corporations  engaged  in  the  business  of  insuring  titles  to  real  estate 
may,  after  the  investment  of  one  hundred  thousand  dollars  in  the  man- 
ner provided  for  in  subdivisions  one,  two,  three  and  four  of  this  section 
invest  an  amount  not  exceeding  fifty  per  cent  of  their  subscribed  capital 
stock,  in  the  preparation  or  purchase  of  the  materials  or  plant  necessary 
to  enable  them  to  engage  in  such  business;  and  such  material  or  plant 
shall  be  deemed  an  asset  valued  at  the  actual  cost  thereof,  in  all  state- 
ments and  proceedings  required  by  law  for  the  ascertainment  and  deter- 
mination of  the  condition  of  such  corporations. 

6.  Companies  organized  for  and  engaged  in  the  business  of  fire,  life, 
health,  accident  and  marine  insurance,  may,  after  the  investment  of  two 
hundred  thousand  dollars,  and  companies  duly  formed  or  organized  for 
the  transaction  of  business  in  any  other  kind  of  insurance  may,  after  the 
investment  of  one  hundred  thousand  dollars,  in  the  manner  provided  in 
subdivisions  one,  two,  three  and  four  of  this  section,  invest  the  balance 
of  their  capital  and  any  accumulations  in  the  purchase  of  or  loans  upon 
the  stock  of  any  corporation  (except  mining  companies)  organized  and 
carrying  on  business  under  the  laws  of  the  state  of  California  which 
have  at  the  time  of  investment  a  market  value  of  not  less  than  their 
paid-in  value,  and  which  are  rated  as  first-class  securities,  or  in  interest- 
bearing  bonds  of  any  corporation  of  any  state  or  territory  of  the  United 
States  not  in  default  of  interest ;  provided,  that  a  two-thirds  vote  of  all 
the  directors  of  such  corporations  shall  approve  such  investment.  It 
shall  be  the  duty  of  the  officers  of  such  corporation  to  report  quarterly 
during  the  months  of  January,  April,  July  and  October  of  each  year  to 
the  insurance  commissioner  a  list  of  such  investments  so  made  by  them, 
and  the  insurance  commissioner  may,  if  such  investments,  or  any  of 
them,  seem  injudicious  to  him,  require  the  sale  of  the  same.  But  no  in- 
vestment in  the  securities  named  in  subdivisions  one,  two,  three  and  six 
of  this  section  must  be  made  in  an  amount  exceeding  the  market  value 
of  such  securities,  at  the  date  of  such  investment. 

7.  Life  insurance  companies  may  loan  upon  their  own  policies;  pro- 
vided, that  the  amount  so  loaned  upon  each  policy  shall  not  exceed  the 
reserve  against  said  policy  at  the  time  said  loan  is  made ;  provided,  fur- 
ther, that  no  policy  loans  whatever  shall  ever  be  used  as  security  which 
may  be  deposited  with  the  insurance  commissioner  under  section  634  of 
the  Political  Code ;  and  provided,  further,  that  whenever  any  such  loan 
in  any  amount  is  made  on  a  policy  registered  with  the  insurance  com- 
missioner under  said  section  634  of  the  Political  Code,  such  registration 
shall  be  forthwith  canceled. 

Enacted,  Stats.  1905,  p.  628.    Amended,  Stats.  1907,  p.  890. 

Section  427  of  the  Civil  Code,  relating  to  how  funds  may  be  invested,  was  repealed 
in  1905  and  two  sections,  each  421  of  the  Civil  Code,  were  enacted  in  1905,  one 
approved  March  3d  and  the  other  approved  March  24th.     Of  these  two  the  former 


42  INSURANCE  LAWS  OF  CALIFORNIA. 

was  repealed  in  1905  and  the  latter  was  amended  in  1907  as  set  forth  above  and  is 
now  the  general  statute  of  California  relating  to  investment  by  insurance  companies 
of  California.  Section  444  of  the  Civil  Code  relating  to  the  investment  of  capital 
stock  by  mutual  health,  life  and  accident  insurance  corporations  was  repealed  in  1907. 
Fire  insurance  companies  organized  outside  the  State  of  California  are  not 
required,  as  a  condition  precedent  to  conducting  business  in  this  state,  to  exhibit 
securities  named  in  section  421  of  the  Civil  Code  to  the  extent  of  a  $200,000.00  invest- 
ment :     Opinion  of  the  Attorney  General,  April  21,  1909. 

CHAPTER  II. 

FIRE,  MARINE  AND  TITLE  INSURANCE  CORPORATIONS. 

Sec.  424.     Payment  of  subscriptions.    Capital  to  be  all  paid  in  twelve  months. 

425.  Certificate  of  capital  stock  paid  up  to  be  filed,  and  when. 

426.  Property  which  may  be  insured. 

428.  Limit  of  one  risk. 

429.  Amounts  to  be  reserved  before  making  dividends. 

430.  Reservations  by  companies  with  less  than  two  hundred  thousand  dol- 

lars capital. 
432.     Corporations  for  insuring  titles  to  real  estate. 

Payment  of  subscriptions.     Capital  to  be  all  paid  in  twelve  months. 

Sec.  424.  The  entire  capital  stock  of  every  fire  or  marine  insurance 
corporation  must  be  paid  up  in  cash  within  twelve  months  from  the  fil- 
ing of  the  articles  of  incorporation,  and  no  policy  of  insurance  must  be 
issued  or  risk  taken  until  twenty-five  per  cent  of  the  whole  capital  stock 
is  paid  up. 

Enacted  March  21,  1872. 

There  is  no  good  reason  for  holding  that  a  company  which  has  failed  to  pay  up  its 
entire  capital  stock  within  the  one  year  period  may  not  thereafter,  upon  fully  paying 
up  its  capital  stock  receive  a  license,  particularly  in  view  of  the  fact  that  there  is  no 
provision  of  the  law  that  it  shall  not,  but  merely  the  direction  of  the  law  that  it  must 
pay  up  its  capital  within  one  year :     Opinion  of  the  Attorney  General,  October  2, 

The  insurance  department  has  no  authority  to  issue  a  certificate  of  authority  to  an 
insurance  company  until  it  has  complied  with  all  the  laws  governing  such  companies. 

The  insurance  department  may  require  such  company  before  issuing  a  certificate  of 
authority  to  reduce  the  amount  of  its  authorized  capital  to  the  amount  shown  by  its 
books  to  have  been  fully  paid  up,  and  may  then  issue  such  certificate. 

Such  company  has  the  right  to  continue  its  stock  selling  until  the  amount  of  its 
capital  is  fully  paid  up,  unless,  before  that,  on  a  suit  of  some  stockholder,  the  state 
shall  have  declared  forfeited  the  right  of  the  company  to  do  business :  Opinion  of 
the  Attorney  General,  October  2,  1911. 

Certificate  of  capital  stock  paid  up  to  be  filed  and  when. 

Sec.  425.  The  president  and  a  majority  of  the  directors  must,  within 
thirty  days  after  the  payment  of  the  twenty-five  per  cent  of  the  capital 
stock,  and  also  within  thirty  days  after  the  payment  of  the  last  install- 
ment or  assessment  of  the  capital  stock  limited  and  fixed,  prepare,  sub- 
scribe, and  swear  to  a  certificate  setting  forth  the  amount  of  the  fixed 
capital  and  the  amount  thereof  paid  up  at  the  times  respectively  in  this 
section  named,  and  file  the  same  in  the  office  of  the  county  clerk  of  the 
county  where  the  principal  place  of  business  of  the  corporation  is 
located,  and  a  duplicate  thereof,  similarly  executed,  with  the  insurance 
commissioner. 

Enacted  March  21,  1872. 

Property  which  may  be  insured. 

Sec.  426.  Every  corporation  formed  for  fire  or  marine  insurance,  or 
both,  may  make  insurance  on  all  insurable  interests  within  the  scope  of 
its  articles  of  incorporation,  and  may  cause  itself  to  be  reinsured. 

Enacted  March  21,  1872. 


FIRE,    MARINE,    AND   TITLE    INSURANCE.  43 

Limit  of  one  risk. 

Sec.  428.  Fire  and  marine  insurance  corporations  must  never  take, 
on  any  one  risk,  whether  it  is  a  marine  insurance  or  an  insurance  against 
fire,  a  sum  exceeding  one  tenth  part  of  their  capital  actually  paid  in,  and 
intact  at  the  time  of  taking  such  risk,  without  at  once  reinsuring  the 
excess  above  one  tenth. 

Enacted  March  21,  1872.  Amended,  Stats.  1873-74,  p.  210;  Stats. 
1905,  p.  570. 

Amounts  to  be  reserved  before  making  dividends. 

Sec.  429.  No  corporation  formed  subsequent  to  April  first,  eighteen 
hundred  and  seventy-eight,  under  the  laws  of  this  state,  and  transacting 
fire,  marine,  inland  navigation  insurance  business,  or  insurance  provided 
for  by  section  420  of  this  code,  except  insurance  of  the  title  to  real  prop- 
erty, must  make  any  dividend  except  from  profits  remaining  on  hand 
after  retaining  unimpaired : 

1.  The  entire  subscribed  capital  stock. 

2.  All  the  premiums  received  or  receivable  on  outstanding  marine  or 
inland  risks,  except  marine  time  risks. 

3.  A  fund  equal  to  one  half  of  the  amount  of  all  premiums  on  all  other 
risks  not  terminated  at  the  time  of  making  such  dividend. 

4.  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settlement, 
and  all  liabilities  for  expenses  and  taxes. 

Enacted  March  21,  1872.  Amended,  Stats.  1877-78,  p.  81 ;  Stats.  1887, 
p.  23. 

Reservation  by  companies  with  less  than  two  hundred  thousand  dollars  capital. 
Sec.  430.     No  fire  or  marine  insurance  corporation,  with  a  subscribed 
capital  of  less  than  two  hundred  thousand  dollars,  must  declare  any 
dividends,  except  from  profits  remaining  on  hand  after  reserving : 

1.  A  sum  necessary  to  form,  with  the  subscribed  capital  stock,  the 
aggregate  sum  of  two  hundred  thousand  dollars ; 

2.  All  the  premiums  received  or  receivable  on  outstanding  marine  or 
inland  risks,  except  marine  time  risks ; 

3.  A  fund  equal  to  one  half  the  amount  of  all  premiums  on  fire  risks 
and  marine  time  risks  not  terminated  at  the  time  of  making  such  divi- 
dend; 

4.  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settle- 
ment, and  all  liabilities  for  expenses  and  taxes. 

Enacted  March  21,  1872. 

Corporations  for  insuring  titles  to  real  estate. 

Sec.  432.  Corporations  transacting  business  in  insuring  titles  to  real 
estate  shall  annually  set  apart  a  sum  equal  to  twenty-five  per  cent  of 
their  premiums  collected  during  the  year,  which  sum  shall  be  allowed 
to  accumulate  until  a  fund  shall  have  been  created  amounting  to  ten  per 
cent  of  the  subscribed  capital  stock.  Such  fund  shall  be  maintained  as  a 
further  security  to  policyholders,  and  shall  be  known  as  the  surplus 
fund ;  and  if  at  any  time  such  fund  shall  be  impaired  by  reason  of  a  loss, 
the  amount  by  which  it  may  be  impaired  shall  be  restored  in  the  manner 
hereinabove  provided  for  its  accumulation.  The  reporting  of  a  loss  shall 
be  deemed  an  impairment  of  such  fund  for  the  purposes  of  this  section. 
Such  corporation  must  not  make  any  dividends  except  from  profits  re- 
maining on  hand  after  retaining  unimpaired : 

1.  The  entire  subscribed  capital  stock. 


44  INSURANCE  LAWS  OP  CALIFORNIA. 

2.  The  amount  owing  to  the  surplus  fund,  under  the  provisions  of 
this  section. 

3.  A  sum  sufficient  to  pay  all  losses  reported,  or  in  course  of  settle- 
ment, which  shall  be  in  excess  of  the  surplus  fund,  and  all  liabilities  for 
expenses  and  taxes. 

Enacted,  Stats.  1887,  p.  23. 

CHAPTER   III. 

MUTUAL   LIFE,    HEALTH,    AND    ACCIDENT    INSURANCE 
CORPORATIONS. 

Sec.  437.  Capital  stock.     Guarantee  fund. 

438.  Of  what  guarantee  fund  shall  consist. 

439.  What  constitutes,  and  deficiency  in  fixed  capital. 

440.  Declaration  of  fixed  capital  to  be  filed. 

441.  Guarantee  notes  and  interest,  how  disposed  of. 

442.  Insured  to  be  entitled  to  vote,  when. 

443.  Number  of  directors  may  be  altered,  how. 

445.  Limitations  to  the  holding  of  stock,  and  in  other  particulars,  may  be 

provided  for  in  by-laws. 

446.  Premiums,  how  payable. 

450.     Policy  to  contain  what  provisions. 
452.     Dividends,  how  made. 

Capital  stock.    Guarantee  fund. 

Sec.  437.  Every  corporation  formed  for  the  purpose  of  mutual  insur- 
ance on  the  lives  or  health  of  persons,  or  against  accidents  to  persons  for 
life  or  any  fixed  period  of  time,  or  to  purchase  and  sell  annuities,  must 
have  a  capital  stock  of  not  less  than  two  hundred  thousand  dollars.  It 
must  not  make  any  insurance  upon  any  risk  or  transact  any  other  busi- 
ness as  a  corporation  until  its  capital  stock  is  fully  paid  up  in  cash,  nor 
until  it  has  also  obtained  a  fund,  to  be  known  as  a  Guarantee  Fund," 
of  not  less  than  two  hundred  and  fifty  thousand  dollars,  as  is  hereinafter 
provided.  If  more  than  the  requisite  amount  is  subscribed,  the  stock 
must  be  distributed  pro  rata  among  the  subscribers.  Any  subscription 
may  be  rejected  by  the  board  of  directors  or  the  committee  thereof,  either 
as  to  the  whole  or  any  part  thereof,  and  must  be,  so  far  as  rejected,  with- 
out effect,  nothing  in  this  section  shall  be  deemed  to  contravene  any  of 
the  provisions  of  section  451. 

Enacted  March  21,  1872.    Amended,  Stats.  1905,  p.  183. 

The  so-called  Home  Benefit  Life  Association  failed  to  organize  in  accordance  with 
section  437,  and  after  doing  business  for  many  years,  an  action  was  brought  against 
the  officers  for  a  large  sum  of  money  paid  in  by  plaintiff  and  his  assignors,  many  in 
number,  upon  the  theory  that  the  association  was  never  legally  incorporated,  and  that 
the  defendants  acted  without  statutory  authority. 

The  evidence  showed  that  the  business  had  been  honestly  administered,  that  the 
moneys  received  had  been  paid  out  in  accordance  with  the  by-laws  which  were 
printed  on  the  back  of  each  certificate  received  by  the  plaintiff  and  his  assignors, 
that  there  was  no  fraud,  that  all  made  substantially  the  same  mistake  in  supposing 
the  association  to  have  been  properly  incorporated,  and  that  under  such  circumstances 
the  parties  were  estopped  to  recover  back  payments  thus  voluntarily  made.  (Perkins 
vs.  Fish  et  al.,  121  Cal.  317.) 

Of  what  guarantee  fund  shall  consist. 

Sec.  438.  The  guarantee  fund  mentioned  in  the  preceding  section 
must  consist  of  the  promissory  notes  of  solvent  parties,  approved  by  the 
board  of  directors  and  by  each  other,  payable  to  the  corporation  or  its 
order,  and  at  such  times,  in  such  modes,  and  in  such  sums,  with  or  with- 
out interest,  and  conformable  in  all  other  respects  to  such  requirements 
as  the  board  of  directors  prescribe ;  but  the  amount  of  the  notes  given  by 
any  one  person  must  not  exceed  in  the  whole  the  sum  of  five  thousand 


MUTUAL   LIFE,    HEALTH,    AND    ACCIDENT    INSURANCE.  45 

dollars,  exclusive  of  interest.  Such  notes  must  be  payable  absolutely 
and  at  the  option  of  the  corporation ;  they  must  be  negotiable,  and  may 
be  indorsed  and  transferred,  or  converted  into  cash,  or  otherwise  dealt 
with  by  the  corporation,  at  its  discretion,  without  reference  to  any  con- 
tingency of  losses  or  expenses.  Such  notes,  or  the  proceeds  thereof,  must 
remain  with  the  corporation  as  a  fund  for  the  better  security  of  persons 
dealing  with  it,  and  constitute  the  assets  of  the  corporation,  liable  for  all 
its  debts,  obligations,  and  indebtedness,  next  after  its  assets  from  pre- 
miums and  other  sources,  exclusive  of  capital  stock,  until  the  net  earn- 
ings over  and  above  its  expenses,  losses  and  liabilities  shall  have  accumu- 
lated in  cash,  or  securities  in  which  the  net  earnings  have  been  invested, 
to  a  sum  which,  with  the  capital  stock,  is  equal  to  the  aggregate  of  the 
original  amounts  of  the  guarantee  fund  and  of  the  capital  stock. 

Enacted  March  21,  1872. 
What  constitutes,  and  deficiency  in  fixed  capital. 

Sec.  439.  The  sum  accumulated,  as  provided  in  the  preceding  sec- 
tion, together  with  the  capital  stock,  shall  become  and  remain  the  fixed 
capital  of  the  corporation,  not  subject  to  division  among  the  stockholders 
or  parties  dealing  with  it,  or  to  be  expended  in  any  manner  otherwise 
than  may  be  required  in  payment  of  the  corporation 's  debts  and  actual 
expenses,  until  the  business  of  the  corporation  is  closed,  its  debts  paid, 
and  its  outstanding  policies  and  obligations  of  every  kind  canceled  or 
provided  for ;  and  if  from  any  cause  a  deficiency  at  any  time  occurs  in 
such  fixed  capital,  no  further  division  of  profits  must  take  place  until 
such  deficiency  has  been  made  up. 

Enacted  March  21,  1872. 

Declaration  of  fixed  capital  to  be  filed. 

Sec.  440.  Whenever  the  fixed  capital  of  the  corporation  is  obtained 
as  hereinbefore  provided,  the  president  of  the  corporation  and  its  act- 
uary, or  its  secretary  if  there  is  no  actuary,  must  make  a  declaration  in 
writing,  sworn  to  before  some  notary  public,  of  the  amount  of  such  fixed 
capital,  and  of  the  particular  kinds  of  property  composing  the  same, 
with  the  nature  and  amount  of  each  kind,  which  must  be  filed  with  the 
original  articles  of  incorporation,  and  a  copy,  certified  by  the  county 
clerk,  must  be  published  for  at  least  four  successive  weeks  in  a  news- 
paper published  in  the  county  where  the  principal  business  of  the  corpo- 
ration is  situated.  Upon  the  filing  of  such  declaration  the  guarantee 
fund  is  discharged  of  its  obligations,  and  all  notes  of  the  fund  remain- 
ing in  the  control  of  the  corporation,  and  not  affected  by  any  lien 
thereon,  or  claim  of  that  nature,  must  be  surrendered  by  it  to  the  makers 
thereof  respectively,  or  other  parties  entitled  to  receive  the  same. 

Enacted  March  21,  1872. 
Guarantee  notes  and  interest,  how  disposed  of. 

Sec.  441.  Until  the  guarantee  fund  is  discharged  from  its  obliga- 
tions, as  provided  in  the  preceding  section,  no  note  must  be  withdrawn 
from  the  fund  unless  another  note  of  equal  solvency  is  substituted  there- 
for, with  the  approval  of  the  board  of  directors.  The  corporation  must 
allow  a  commission,  not  exceeding  five  per  cent  per  annum,  on  all  such 
guarantee  notes  while  outstanding,  and  also  interest  on  all  moneys  paid 
on  such  notes  by  the  parties  liable  thereon,  at  the  rate  of  twelve  per 
cent  per  annum,  payable  half  yearly,  until  repaid  by  the  corporation, 


46  INSURANCE  LAWS  OF  CALIFORNIA. 

unless  the  current  rate  of  interest  is  different  from  this  amount,  in  which 
case  the  rate  payable  may,  from  time  to  time,  at  intervals  of  not  less  than 
one  year,  be  increased  or  reduced  by  the  board  of  directors,  so  as  to  con- 
form to  the  current  rate. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  210. 

Insured  to  be  entitled  to  vote,  when. 

Sec.  442.  After  the  filing  of  the  declaration  of  the  fixed  capital,  as  in 
this  article  provided,  the  holders  of  policies  of  life  insurance  for  the  term 
of  life,  on  which  the  premiums  are  not  in  default,  may  vote  at  the  elec- 
tion of  directors,  and  have  one  vote  for  each  one  thousand  dollars  insured 
by  their  policies,  respectively. 
*  Enacted  March  21,  1872. 

Number  of  directors  may  be  altered,  how. 

Sec.  443.  The  number  of  directors  specified  in  the  articles  of  incor- 
poration may  be  altered  from  time  to  time  during  the  existence  of  the 
corporation  by  resolution,  at  the  annual  meeting  of  a  majority  of  those 
entitled  to  vote  at  the  election  of  directors,  but  the  number  must  never 
be  reduced  below  five. 

Enacted  March  21,  1872. 

Limitations  to  the  holding  of  stock  and  in  other  particulars,  may  be  provided 
for  in  by-laws. 

Sec.  445.  The  corporation  may,  by  its  by-laws,  limit  the  number  of 
shares  which  may  be  held  by  any  one  person,  and  make  such  other  provi- 
sions for  the  protection  of  the  stockholders  and  the  better  security  of 
those  dealing  with  it  as  to  a  majority  of  the  stockholders  may  seem 
proper,  not  inconsistent  with  the  provisions  of  this  title  or  part. 

Enacted  March  21,  1872. 

Premiums,  how  payable. 

Sec.  446.  All  premiums  must  be  payable  wholly  in  cash,  or  one  half 
or  a  greater  proportion  in  cash,  and  the  remainder  in  promissory  notes 
bearing  interest,  as  may  be  provided  for  by  the  by-laws.  Agreements 
and  policies  of  insurance  made  by  the  corporation  may  be  upon  the  basis 
of  full  or  partial  participation  in  the  profits,  or  without  any  participa- 
tion therein,  as  may  be  provided  by  the  by-laws  and  agreed  between  the 
parties. 

Enacted  March  21,  1872. 

Policy  to  contain  what  provisions. 

Sec.  450.  Every  contract  or  policy  of  life  insurance  hereinafter  made 
by  any  person  or  corporation,  with  and  upon  the  life  of  a  resident  of  this 
state,  and  delivered  within  this  state,  shall  provide,  in  event  of  default 
of  any  premium  payment  after  three  full  annual  premiums  shall  have 
been  paid  on  such  policy,  that  without  any  action  on  the  part  of  the  in- 
sured, the  net  value  of  such  policy  based  upon  the  reserve  basis  used  in 
computing  the  premiums  and  values  thereunder  (the  policy  to  specify 
the  mortality  table  and  rate  of  interest  so  adopted)  which  net  value  shall 
be  at  least  equal  to  its  entire  net  reserve  at  the  date  of  default,  including 
that  of  dividend  additions,  if  any,  based  upon  a  standard  not  lower  than 
the  American  Experience  Tables  of  Mortality  with  interest  at  three  and 
one  half  per  cent  yearly,  less  a  surrender  charge  of  not  more  than  two 
and  one  half  per  cent  of  the  face  amount  of  the  policy  and  of  any  exist- 


MUTUAL   LIFE,    HEALTH,    AND   ACCIDENT   INSURANCE.  47 

ing  dividend  additions  thereto  and  less  any  indebtedness  to  the  company 
on  or  secured  by  the  policy,  shall  be  applied  as  a  single  premium  to  the 
purchase  of  one  of  the  following  stipulated  forms  of  insurance : 

First — Paid-up  non-participating  term  insurance  in  the  amount  of  the 
face  of  the  policy,  plus  dividend  additions,  if  any,  for  such  a  period  as 
the  net  value  outlined  above  will  purchase  at  the  net  single  premium,  at 
the  attained  age  of  the  insured  at  the  time  of  the  lapse,  based  upon  the 
reserve  basis  described  in  the  policy ;  provided,  however,  that  under  en- 
dowment contracts  the  term  shall  not  extend  beyond  the  endowment 
period  named  in  the  original  contract,  and  the  excess  value,  if  any,  shall 
be  applied  as  a  net  single  premium  to  purchase  in  the  same  manner 
paid-up  pure  endowment  insurance,  payable  at  the  end  of  the  endow- 
ment period  named  in  the  contract  if  the  insured  be  then  living ;  or, 

Second — Paid-up  non-participating  term  insurance  in  the  amount  of 
the  face  of  the  policy,  plus  dividend  additions,  if  any,  and  less  any  out- 
standing indebtedness,  for  such  a  period  as  the  net  value  outlined  above 
will  purchase  at  the  net  single  premium,  at  the  attained  age  of  the 
insured,  based  upon  the  reserve  basis  described  in  the  policy ;  provided, 
however,  that  under  endowment  contracts  the  term  shall  not  extend  be- 
yond the  endowment  period  named  in  the  original  contract,  and  the 
excess  value,  if  any,  shall  be  applied  as  a  net  single  premium  to  purchase 
in  the  same  manner  paid-up  pure  endowment  insurance,  payable  at  the 
end  of  the  endowment  period  named  in  the  contract  if  the  insured  be 
then  living ;  or, 

Third — Paid-up  non-participating  insurance  payable  at  the  time  and 
on  the  conditions  named  in  the  policy  for  such  an  amount  as  the  net 
value  outlined  above  will  purchase  at  the  net  single  premium,  at  the 
attained  age  of  the  insured,  based  upon  the  reserve  basis  described  in 
the  policy ;  provided,  however,  that  the  policy  may  be  surrendered  to  the 
company,  at  its  home  office,  upon  due  application  by  the  legal  owner 
thereof,  within  one  month  after  date  of  premium  default,  for  a  specified 
cash  value  which  shall  be  at  least  equal  to  the  sum  which  would  be  other- 
wise available  for  the  purchase  of  the  automatic  form  of  insurance  pro- 
vided therein ;  and  provided  further,  that  the  company  may  defer  pay- 
ment of  such  cash  value  for  not  more  than  six  months  after  application 
therefor  is  made.  No  agreement  between  the  company  and  the  policy- 
holder or  applicant  for  insurance  contrary  to  the  foregoing  shall  be  held 
to  waive  any  of  the  provisions  provided  above.  Any  life  insurance 
policy  issued  upon  the  life  of  a  resident  of  this  state,  and  delivered  within 
this  state,  which  does  not  contain  an  automatic  non-forfeiture  value  in 
conformity  with  the  foregoing  shall  be  construed  as  granting  non- 
participating  term  insurance,  as  provided  in  paragraph  first  of  this 
section,  and  such  a  benefit  shall  be  read  into  the  contract.  The  provi- 
sions of  this  section  shall  not  apply  to  annuities,  industrial  policies  or  to 
term  contracts  issued  for  periods  of  twenty  years  or  less. 

Sec.  2.  All  acts  and  parts  of  acts  in  conflict  with  this  act  are  hereby 
repealed. 

Enacted,  Stats.  1873-4,  p.  271.  Amended,  Stats.  1877-8,  p.  82 ;  1880, 
p.  91 ;  1911,  p.  1272. 

A  policy  of  insurance  was  issued  of  the  character  known  as  the  ordinary  life  divi- 
dend insurance  policy.  After  the  premiums  had  been  paid  for  several  years,  a  default 
occurred  and  the  policy  was  surrendered  to  the  company  for  a  cash  consideration. 
Within  eighteen  months  after  the  surrender  the  party,  upon  whose  life  the  insurance 


48  INSURANCE  LAWS  OP  CALIFORNIA. 

was  brought,  died,  and  an  action  was  brought  against  the  company  based  upon  its 
alleged  fraud  and  deceit  in  procuring  the  surrender  of  the  policy.  It  was  contended 
that  the  stipulation  mentioned  in  section  450,  to  the  effect  that  after  payment  of 
three  full  annual  premiums  a  policy  should  cease  to  become  void  solely  by  reason  of 
non-payment,  etc.,  should  be  read  into  and  considered  a  part  of  the  policy,  as  if  it 
had  been  actually  inserted  therein.  The  court  was  of  the  opinion,  however,  that  this 
contention  was  not  tenable,  because  in  providing  severe  penalties  for  the  omission 
to  insert  the  stipulation  mentioned  the  legislature  recognized  the  fact  that  it  might 
be  left  out  of  any  policy  in  which  event  the  violation  of  the  section  was  a  matter 
between  the  company  and  the  state,  which  could  not  affect  the  terms  of  the  policy. 
(Straube  vs.  Pacific  M.  L.  Ins.  Co.,  123  Cal.  677.) 

This  construction  of  the  section  was  affirmed  in  Rife  vs.  Union  Central  Life  Co^ 
129  Cal.  455. 

See  Nielsen  vs.  Provident  Savings  Life  Ins.  Society  of  N.  Y.,  139  Cal.  332,  con- 
struing New  York  statute,  similar  in  many  respects  to  section  450  of  our  Civil  Code. 

Dividends,  how  made. 

Sec.  452.     No  corporation  formed  under  the  laws  of  this  state,  and 

transacting  life  insurance  business,  must  make  any  dividends,  except 

from  profits  remaining  on  hand  after  retaining  unimpaired : 

(1)  The  entire  capital  stock; 

(2)  A  sum  sufficient  to  pay  all  losses  reported  or  in  course  of  settle- 
ment, and  all  liabilities  for  expenses  and  taxes  \ 

(3)  A  sum  sufficient  to  reinsure  all  outstanding  policies,  as  ascer- 
tained and  determined  upon  the  basis  of  the  American  Experience  Table 
of  Mortality,  and  interest  at  the  rate  of  four  and  one  half  per  cent  per 
annum. 

Enacted,  Stats.  1877-8,  p.  83.  Eepealed,  Stats.  1880,  p.  72.  Added, 
Stats.  1905,  p.  571. 

CHAPTER  IV. 

MUTUAL  BENEFIT  AND  LIFE  ASSOCIATIONS. 

Sec.  452a.     Formation  of  the  association. 

453.       Levying  of  assessments.     By-laws  which  may  be  made. 

Formation  of  the  association. 

Sec.  452a.  Associations  of  not  exceeding  one  thousand  persons  may 
be  formed  for  the  purpose  of  paying  to  the  nominee  of  any  member  a 
sum,  upon  the  death  of  the  member,  not  exceeding  three  dollars  for  each 
member  of  the  association.  Such  association  may  be  formed  by  filing 
articles  of  incorporation  in  the  office  of  the  clerk  of  the  county  in  which 
the  principal  place  of  business  is  situated  and  a  certified  copy  of  such 
articles  of  incorporation,  duly  certified  by  the  county  clerk,  in  the  office 
of  the  secretary  of  state.  Such  articles  must  state  the  names  of  the  cor- 
poration, its  general  purposes,  its  principal  place  of  business,  its  term  of 
existence,  not  exceeding  fifty  years,  the  names  and  residences  of  the 
directors  selected  or  appointed  to  serve  for  the  first  year,  and  must  be 
signed  and  verified  as  required  by  sections  292  and  594. 

Enacted,  Stats.  1905,  p.  411. 

Levying  of  assessments.     By-laws  which  may  be  made. 

Sec.  453.  Each  association  provided  for  in  this  chapter  may,  on  the 
death  of  a  member,  levy  an  assessment  on  the  surviving  members  of  not 
exceeding  three  dollars  for  each  member,  and  collect  and  pay  the  same 
to  the  nominee  of  such  decedent,  and  may  also  provide  for  the  payment 
of  such  annual  payments  by  members  as  may  be  deemed  just,  but  no 
member  must  be  subject  to  any  annual  assessment  in  excess  of  that  estab- 
lished when  he  joined  the  association.  The  association  may  make  such 
by-laws  not  inconsistent  with  the  laws  of  the  state  as  may  be  necessary 


CORPORATIONS   TO    SAVE   PROPERTY   AND   HUMAN   LIFE.  49 

for  its  government  and  the  transaction  of  its  business ;  may,  by  its  name, 
sue  and  be  sued ;  loan  such  funds  as  it  may  have  on  hand ;  and  own  suffi- 
cient real  estate  for  its  business  purposes  and  such  as  it  may  be  neces- 
sary to  purchase  on  foreclosure  of  its  mortgages. 

Enacted,  Stats.  1905,  p.  411. 

The  statute  of  1873-4,  page  745,  as  amended  by  the  statutes  of  1880,  page  250, 
and  1901,  page  6,  relating  to  Mutual  Benefit  Associations,  is  codified  in  the  above 
sections  of  the  Civil  Code  (452a,  453). 

CHAPTER  V. 

CORPORATIONS  TO  DISCOVER  FIRE  AND  SAVE  PROPERTY 
AND  HUMAN  LIFE  FROM  DESTRUCTION  THEREBY. 

Sec.  453a.     Powers  of  the  corporation. 

4536.     Right  of  way  of  corporation  and  its  officers  when  running  to  fires. 
453c.     Yearly  meeting  of  corporation,  notice  to  be  given  thereof,  and  pro- 
ceedings which  may  be  authorized  thereat. 

Powers  of  the  corporation. 

Sec.  453a.  Any  corporation  of  underwriters  heretofore  organized 
and  now  existing,  or  which  may  be  hereafter  organized  under  the  laws  of 
this  state,  for  the  purpose  of  discovering  and  preventing  fires  and  of 
saving  property  and  human  life  from  conflagration,  and  doing  business 
within  any  municipal  corporation  of  this  state,  has  power,  at  its  own 
proper  cost  and  expense,  to  maintain  a  corps  of  men,  with  proper  officers, 
equipped  with  the  necessary  machinery  and  apparatus  therefor,  whose 
duty  it  is,  so  far  as  practicable,  to  discover  and  prevent  fires  and  save 
property  and  human  life  from  conflagration ;  and  for  the  effective  dis- 
charge of  such  duties,  authority  is  hereby  granted  such  corps  to  enter  any 
building  on  fire,  or  in  which  property  is  on  fire,  or  which  such  corps  or 
any  officer  thereof  deems  to  be  immediately  exposed  to  any  existing  fire, 
or  in  danger  of  taking  fire  from  a  burning  building,  and  to  remove  or 
otherwise  save  and  protect  from  conflagration  or  damage  by  water  any 
property,  during  and  immediately  after  such  fire.  Nothing  in  this 
chapter  must  be  so  construed  as  in  any  degree  to  lessen,  impair,  or  inter- 
fere with  the  powers,  privileges,  duties  or  authority  of  the  regular  fire 
department  of  such  municipality ;  nor  can  any  act  of  such  corps  justify 
any  owner  of  any  building  or  property  in  abandoning  such  building  or 
property. 

Enacted,  Stats.  1905,  p.  571. 

Right  of  way  of  corporations  and  its  officers  when  running  to  fires. 

Sec.  453&.  Such  corporation,  with  its  officers  and  corps,  when  run- 
ning to  a  fire  with  its  horses,  vehicles,  and  salvage  apparatus,  has  the 
same  right  of  way  as  is  or  may  be  bestowed  by  any  ordinance  of  the 
municipality  or  law  of  this  state  upon  the  regular  fire  department  of  the 
municipality  wherein  such  corporation  is  acting ;  but  the  rights  of  such 
fire  department  must  always  be  paramount  to  the  rights  of  such  corpora- 
tion. All  ordinances  now  existing  or  which  may  hereafter  be  passed  by 
the  municipal  authorities  of  any  city  and  county,  or  of  any  incorporated 
city  or  town  wherein  such  a  corporation  may  carry  on  business,  and  all 
laws  of  this  state  applicable  to  such  city  and  county,  or  city  or  town,  for 
the  conviction  or  punishment  of  any  person  or  persons  wilfully  or  care- 
lessly obstructing  the  progress  of  the  apparatus  of  the  fire  department  of 
such  city  and  county,  or  city  or  town,  while  going  to  a  fire,  or  of  any 
person  or  persons  wilfully  or  carelessly  injuring  any  animal  or  property 

-IN 


50  .  INSURANCE  LAWS  OF  CALIFORNIA. 

of  said  fire  department,  are  equally  applicable  to  any  person  or  persons 
wilfully  or  carelessly  obstructing  the  progress  of  the  apparatus  of  such 
corporation  while  going  to  a  fire,  and  to  any  person  or  persons  who 
wilfully  or  carelessly  injures  any  animal  or  property  of  such  corpo- 
ration; and  said  laws  and  ordinances,  and  their  penalties,  may  be 
enforced  in  the  same  courts  and  in  the  same  manner,  and  with  equal 
force  and  effect,  as  in  the  case  of  the  fire  department. 
Enacted,  Stats.  1905,  p.  572. 

Yearly  meeting  of  corporation,  notice  to  be  given  thereof,  and  proceedings 
which  may  be  authorized  thereat. 

Sec.  453c.  In  the  month  of  July,  in  every  year,  there  must  be  held  a 
meeting  of  all  corporations  created  for  the  purposes  specified  in  this 
chapter,  of  which  ten  days'  previous  notice  must  be  inserted  in  at  least 
one  daily  newspaper  published  in  the  municipality  where  said  corpora- 
tion is  organized  or  established,  at  which  meeting  each  insurance  com- 
pany, corporation,  association,  underwriter,  agent,  person,  or  persons 
doing  a  fire  insurance  business  in  said  municipality,  whether  members  of 
said  corporation  or  not,  shall  have  a  right  to  be  represented,  and  shall  be 
entitled  to  one  vote.  A  majority  of  the  whole  number  so  represented  has 
power  to  decide  upon  the  question  of  sustaining  the  fire  patrol  organized 
by  corporations  heretofore  created,  or  that  may  be  hereafter  created,  and 
fixing  the  maximum  amount  of  expenses  which  may  be  incurred  there- 
for during  the  fiscal  year  next  to  ensue,  which  amount  must  in  no  case 
exceed  two  per  centum  of  the  aggregate  premiums  returned  as  received, 
as  provided  in  this  section,  and  the  whole  of  such  amount,  or  so  much 
thereof  as  may  be  necessary,  may  be  assessed  upon  all  insurance  com- 
panies, corporations,  associations,  underwriters,  agents,  person,  or  per- 
sons who  assume  risks  and  accept  premiums  for  fire  insurance  in  said 
municipality,  as  hereinbefore  mentioned,  in  proportion  to  the  several 
amounts  of  premiums  returned,  as  received  by  each,  as  hereinafter  pro- 
vided, and  such  assessment  is  collectible  by  and  in  the  name  of  said 
corporation,  in  any  court  of  law  in  the  State  of  California  having  juris- 
diction, in  such  manner  and  at  such  time  or  times  as  said  corporation  may 
determine.  In  order  to  provide  for  the  payment  of  persons  employed  by 
said  corporation,  and  to  maintain  suitable  rooms,  and  apparatus  for  sav- 
ing life  and  property  contemplated,  said  corporation  is  empowered  to 
require  a  statement  to  be  furnished,  semi-annually,  by  all  insurance  com- 
panies, corporations,  associations,  underwriters,  agents  or  persons  of  the 
aggregate  amount  of  premiums  received  for  insuring  property  in  the 
municipality  where  said  corporation  is  organized  or  established,  for  and 
during  the  six  months  next  preceding  the  first  day  of  July  and  the  first 
day  of  January  of  each  year,  which  statement  must  be  sworn  to  by  the 
president  or  secretary  of  the  corporation  or  association,  or  by  the  agent 
or  person  so  acting  or  effecting  such  insurance  in  said  municipality,  and 
must  be  handed  to  the  secretary  of  said  corporation  heretofore  created 
or  hereafter  to  be  created  under  the  provisions  of  this  chapter  within  ten 
days  after  the  first  day  of  July  and  the  first  day  of  January  of  each  year. 
Said  secretary  must,  within  the  ten  days  aforesaid,  by  written  or  printed 
demand  signed  by  him,  require  from  every  insurance  company,  corpora- 
tion, association,  underwriter,  agent,  or  person  engaged  in  the  business 
of  fire  insurance  in  the  municipality  where  said  corporation  is  organized 
or  established,  the  statement  hereinbefore  provided  for.     Such  demand 


LIFE,    HEALTH,    ACCIDENT,    AND    ANNUITY   INSURANCE.  51 

may  be  delivered  personally  at  the  office  of  such  insurance  company, 
corporation,  association,  underwriter,  agent,  or  person  within  said 
municipality,  and  every  officer  of  such  insurance  company,  corporation, 
association,  and  every  such  underwriter,  agent  or  person,  who,  for  fifteen 
days  after  said  demand,  neglects  to  render  the  statement  herein  provided 
for,  forfeits  fifty  dollars  for  the  use  of  said  corporation,  and  also  forfeits 
for  its  use  twenty-five  dollars  in  addition  for  every  day  he  so  neglects 
after  the  expiration  of  the  said  fifteen  days,  and  such  additional  penalty 
may  be  computed  and  collected  up  to  the  time  of  the  trial  of  any  action 
brought  for  the  recovery  thereof.  The  penalty  herein  provided  for  may 
be  sued  for  and  collected,  with  costs,  in  any  court  of  law  within  the 
State  of  California  having  jurisdiction,  by  and  in  the  name  of  said  cor- 
poration. 

Enacted,  Stats.  1905,  p.  572. 

The  statute  of  1875-6,  page  689,  concerning  the  powers  of  underwriters,  as 
amended  by  the  statute  of  1897,  page  223,  is  codified  in  the  foregoing  sections  of  the 
Civil  Code  (453a,  6,  c). 

CHAPTER  VI. 

LIFE,  HEALTH,  ACCIDENT,  AND  ANNUITY  OR  ENDOWMENT 
INSURANCE  ON  THE  ASSESSMENT  PLAN. 

Sec.  453d.     Contracts  which  may  be  made  by,  defined. 

453e.     Formation  of  corporations ;  issuing  of  contracts ;  investments. 

453/.     Preexisting  corporations,  right  of  to  reincorporate. 

453tf.    Contracts  of  insurance,  contents  and  effects  of. 

453ft.     Reserve  and  emergency  fund. 

453*.      Foreign  corporations,  conditions  precedent  to  doing  business  in  this 

state. 
453;.     Limitations  upon  right  to  issue  contracts  of  insurance. 
453fc.     Exemptions  from  attachment  and  execution. 
453J.     Statements  to  be  filed  with  the  insurance  commissioner;  proceedings 

to  be  taken  by  him  thereon. 
453m.    Lapsing  of  policies  when  forbidden. 
453n.     Fees  and  penalties. 

453o.     Insurance  commissioner  to  present  bills  for  certain  expenses. 
453p.     Exemption  of  fraternal  societies  from  this  chapter. 

Contracts. which  may  be  made  by,  defined. 

Sec.  453d  Every  contract  whereby  a  benefit  may  accrue  to  a  party 
or  parties  therein  named  upon  the  death  or  physical  disability  of  a 
person  insured  thereunder,  or  for  the  payment  of  any  sums  of  money 
dependent  'in  any  degree  upon  the  collection  of  assessments  or  dues 
from  persons  holding  similar  contracts,  is  deemed  a  contract  of  mutual 
insurance  upon  the  assessment  plan.  Such  contracts  must  show  that  the 
liabilities  of  the  insured  thereunder  are  not  limited  to  fixed  premiums. 

Enacted,  Stats.  1905,  p.  418. 

Upon  the  insolvency  of  a  benefit  life  association  organized  upon  the  assessment 
plan,  the  reserve  fund  of  five  thousand  dollars  required  by  the  act  of  1891,  to  be 
held  and  deposited  in  trust  for  the  contract-holders  of  the  corporation,  is  designed  as 
an  emergency  fund,  to  be  used  only  in  case  of  the  insolvency  of  the  corporation,  and 
can  not  be  used  to  pay  the  benefits  due  from  the  corporation  while  solvent,  nor  is  it 
subject  to  any  liens  in  favor  of  policyholders,  nor  to  executions  for  any  debts  of  the 
corporation.  It  must  be  distributed  pro  rata  among  the  beneficiaries  for  whose 
benefit  the  policies  were  issued ;  and  neither  the  members  of  the  association  per  capita 
nor  its  general  creditors  can  share  in  the  distribution.  (San  Francisco  Savings 
Union  vs.  Long,  123  Cal.  109.) 

The  term  "contract-holders"  has  been  defined  to  mean  holders  of  contracts  of 
life  insurance,  and  does  not  include  general  creditors,  or  holders  of  "debenture  con- 
tracts," who  have  loaned  money  to  the  company,  and  who  have  no  interest  in  the 
trust  fund  until  all  holders  of  insurance  have  been  paid  therefrom.  All  contract- 
holders  are  entitled  to  share  ratably  in  the  trust  funds  and  are  all  necessary  parties 
to  a  distribution,  which  can  not  be  had  except  upon  a  bill  in  equity  in  the  nature  of 


52  INSURANCE  LAWS  OF  CALIFORNIA. 

a  creditors'  bill,  upon  the  hearing  of  which  with  all  parties  interested  before  it,  the 
court  may  make  distribution  and  appoint  a  receiver  to  carry  distribution  into  effect. 
(Engwicht  vs.  Pacific  States,  etc.  Co.,  153  Cal.  183.) 

Formation  of  corporations;  issuing  contracts;  investments. 

Sec.  453e.  Corporations  may  be  formed  to  carry  on  the  business  of 
mutual  insurance  upon  the  assessment  plan,  and  are  subject  only  to  the 
provisions  of  this  chapter.  No  such  corporation  must  issue  contracts  of 
insurance  until  at  least  two  hundred  persons  have  applied,  in  writing, 
for  membership  or  insurance  therein,  and  have  paid  to  the  treasurer  of 
such  corporation  the  sum  of  five  thousand  dollars.  This  sum  must  be 
invested  in  bonds  or  securities,  approved  by  the  insurance  commissioner 
of  this  state,  or  deposited  in  some  bank  in  this  state  where  it  will  earn 
interest.  Said  bonds  or  securities,  or  evidences  of  such  deposit,  must  be 
placed,  through  the  insurance  commissioner  of  this  state,  with  the  state 
treasurer,  and  the  principal  sum  must  be  held  in  trust  for  the  contract- 
holders  of  such  corporation,  with  the  right  in  the  corporation  to  exchange 
said  bonds,  securities,  or  evidence  of  bank  deposit  for  others  of  like 
value.  Such  corporation  must  also,  as  a  condition  precedent  to  issuing 
any  contracts  of  insurance,  obtain  the  written  certificate  of  the  insurance 
commissioner  that  it  has  complied  with  the  requirements  of  this  chapter ; 
and  that  the  name  of  the  corporation  is  not  the  same  as  that  of  any 
other  corporation  of  this  or  other  states,  as  indicated  by  the  insur- 
ance department  reports  in  his  office ;  nor  must  the  commissioner  approve 
any  name  or  title  so  closely  resembling  another  as  to  mislead  the  public. 
No  corporation  formed  hereunder  has  legal  existence  after  one  year  from 
the  date  of  its  articles,  unless  its  organization  has  been  completed  and 
business  commenced ;  nor  must  any  corporation  or  individual  solicit,  or 
cause  to  be  solicited,  any  business,  until  such  corporation  has  com- 
plied with  the  provisions  of  section  633  of  the  Political  Code.  Nothing 
contained  in  this  chapter  shall  be  construed  to  exempt  any  corporation 
from  the  provisions  of  sections  296  and  299  of  this  code. 

Enacted,  Stats.  1905,  p.  418. 

See  note  to  section  453d,  ante. 

Before  one  of  these  corporations  can  be  declared  insolvent,  it  has  a  right  to  be 
heard  before  the  insurance  commissioner,  and  the  superior  court  at  the  suit  of  a 
creditor  or  stockholder  has  no  right  to  appoint  a  receiver. 

A  complete  remedy  by  proceeding  instituted  by  the  attorney  general,  after  exam- 
ination by  the  commissioner,  is  provided  by  section  10  of  the  act  of  1891.  There  is 
no  other  method  provided  in  the  act  by  which  the  authority  of  the  corporation  to  do 
business  can  be  revoked.     (Murray  vs.  Superior  Court,  129  Cal.  628.) 

See  section  4531,  post. 

The  act  evidently  contemplates  that  there  must  be  such  confidence  in  the  proposed 
scheme  that  at  least  two  hundred  persons  can  be  found  who  will  apply  for  member- 
ship or  insurance  and  pay  in  the  prescribed  amount  of  money— not  that  any  one  or 
two  promoters  can  evade  that  provision  by  themselves  putting  up  some  sort  of 
security.     (Stevens  vs.  Reeves,  138  Cal.  683.) 

To  recover  upon  a  certificate  of  membership  which  entitled  the  holder  to  a  benefit 
of  ten  thousand  dollars,  payable  in  five  equal  installments  or  endowments,  five 
coupons  being  attached  to  the  certificate  for  two  thousand  dollars  each,  to  mature 
at  different  periods  of  time,  on  the  falling  due  of  the  first  coupon,  after  demand,  the 
holder  brought  suit  against  the  corporation  and  joined  the  treasurer  of  the  State  of 
California  as  a  defendant,  as  the  holder  of  securities  under  the  act  upon  which  the 
holder  claimed  a  lien. 

The  court  gave  judgment  for  plaintiff,  and  on  appeal  the  supreme  court  affirmed 
the  judgment,  holding  the  treasurer  to  be  a  proper  party  defendant.  (Kruger  vs.  Life 
and  Annuity  Association  et  al.,  106  Cal.  99.) 

Preexisting  corporations,  right  of  to  reincorporate. 

Sec.  453/.     Any  existing  corporation  engaged  in  the  business  of  life, 

health,  accident,  or  endowment  insurance  on  the  assessment  plan  may  re- 


LIFE,    HEALTH,    ACCIDENT,    AND    ANNUITY   INSURANCE.  53 

incorporate  under  the  provisions  of  this  code  and  chapter,  but  it  is  not 
obliged  to  do  so,  and  may,  without  such  reincorporation,  exercise  the 
rights,  powers  and  privileges  conferred  by  this  chapter. 
Enacted,  Stats.  1905,  p.  419. 

Where  a  so-called  corporation  had  for  many  years  been  carrying  on  the  business 
of  insurance  on  the  mutual  benefit  plan,  the  members  assenting  to  the  by-laws  on 
joining,  although  not  properly  incorporated,  nor  complying  with  the  provisions  of  the 
act  of  March,  1891,  payments  voluntarily  made  by  the  members,  can  not  in  the 
absence  of  fraud,  be  recovered  from  the  officers.     (Perkins  vs.  Fish,  121  Cal.  317.) 

Contracts  of  insurance,  contents  and  effect  of. 

Sec.  453<7.  Every  contract  of  insurance  issued  by  such  corporation 
must  specify  the  sum  or  sums  to  be  paid  upon  the  happening  of  the  con- 
tingency insured  against,  and  when  such  payments  must  be  made.  Un- 
less the  contract  is  invalidated  by  fraud  or  by  breach  of  its  conditions, 
the  corporation  is  obligated  to  pay  the  beneficiary  the  amount  or 
amounts  specified  in  its  contract  at  the  time  or  times  therein  named,  and 
such  indebtedness  is  a  lien  upon  all  the  property  of  such  corporation, 
with  priority  over  all  indebtedness  thereafter  incurred,  except  as  here- 
inafter provided  in  case  of  insolvency.  Failure  to  make  such  payment, 
within  thirty  days  after  notice,  at  the  home  office,  by  mail,  as  provided 
by  law,  of  a  final  judgment,  unless  waiver  is  made  by  the  beneficiary, 
constitutes  a  forfeiture  of  the  right  to  do  business. 

Enacted,  Stats.  1905,  p.  419. 

Reserve  and  emergency  fund. 

Sec.  453/i.  Every  domestic  corporation,  organized  to  do  or  doing 
business  of  insurance  on  the  assessment  plan,  must  accumulate  a  reserve 
or  emergency  fund,  which  must,  at  all  times,  be  not  less  than  the  largest 
benefit  contracted  to  be  paid  by  it  to  any  one  person.  Every  corporation 
organized  under  the  provisions  of  this  chapter  must  accumulate  such 
fund  within  a  year  from  the  date  of  its  certificate  of  incorporation.  Such 
fund,  to  the  extent  of  the  largest  amount  contracted  to  be  paid  by  any 
such  corporation  to  any  one  person,  must  be  invested  and  deposited,  as 
provided  in  section  453e,  with  the  right  in  the  corporation  to  exchange 
any  such  securities  for  others  of  equal  value.  The  deposit  required  by 
section  453e  constitutes  a  part  of  the  reserve  required  by  this  section, 
at  the  option  of  such  corporation.  When  any  such  corporation  discon- 
tinues business,  this  fund  must  be  returned  to  such  corporation,  or  dis- 
posed of  as  may  be  determined  by  the  superior  court  of  the  county  in 
which  is  its  principal  place  of  business. 

Enacted,  Stats.  1905,  p.  419. 

San  Francisco  Savings  Union  vs.  Long,  123  Cal.  107,  118. 
See  note  to  section  453d,  ante. 

Foreign  corporations,  conditions  precedent  to  doing  business  in  this  state. 

Sec.  543i     Corporations  organized  under  the  laws  of  any  other  state 

or  country  to  transact  the  business  of  mutual  assessment  insurance 

must,  as  a  condition  precedent  to  transacting  business  in  this  state, 

comply  with  the  provisions  of  sections  405  and  408  of  this  code,  and 

deposit  with  the  insurance  commissioner  of  this  state  a  certified  copy  of 

its  charter  or  other  instrument  required  by  its  home  authorities;   a 

statement  under  oath,  of  its  president  or  secretary,  of  its  business  for 

the  preceding  year,  in  such  form  as  may  be  required  by  the  insurance 

commissioner  of  this  state;  an  appointment  of  a  general  agent,  service 

upon  whom  binds  the  corporation ;  a  certificate  that  for  the  next  preced- 


54  INSURANCE  LAWS  OP  CALIFORNIA. 

ing  twelve  months  it  has  paid  in  full  the  maximum  amount  named  in 
its  contract  of  insurance ;  a  certificate  from  the  proper  officer  of  its  state 
or  government  that  like  corporations  of  this  state  are  legally  entitled  to 
do  business  in  such  state  or  country ;  copies  of  its  contracts  of  insurance 
and  applications,  which  must  show  that  the  liabilities  of  its  members  are 
not  limited  to  fixed  premiums;  and  evidence,  satisfactory  to  the  insur- 
ance commissioner,  that  the  corporation  has  accumulated  a  fund  equal 
to  that  required  of  like  corporations  in  this  state,  constituting  a  reserve 
or  surplus  fund,  held  in  trust  for  the  benefit  of  its  contract-holders,  and 
so  invested  and  held  as  required  by  the  laws  of  the  state  or  government 
under  which  such  corporation  was  organized.  The  insurance  commis- 
sioner must  thereupon  issue  a  license  to  such  corporation  to  do  business  in 
this  state.  This  license  must  be  renewed  annually,  and  may  be  revoked 
whenever  it  is  ascertained  that  the  statements  required  to  be  made  by 
this  section  are  not  true.  Upon  such  revocation,  notice  thereof  must  be 
given  by  the  insurance  commissioner  by  publication  in  some  newspaper 
published  in  the  city  and  county  of  San  Francisco,  for  two  weeks,  daily, 
and  no  new  contracts  must  be  made  by  such  company  in  this  state.  When 
any  other  state  or  country  imposes  any  additional  license,  fees,  taxes  or 
penalties  upon  any  corporation  organized  or  doing  business  under  this 
chapter,  like  license,  fees,  taxes  or  penalties  are  imposed  upon  corpora- 
tions of  the  same  kind  and  their  agents  of  such  state  or  country  doing 
business  in  this  state. 

Enacted,  Stats.  1905,  p.  419. 

Limitations  upon  right  to  issue  contracts  of  insurance. 

Sec.  453i.  No  corporation  doing  business  under  this  chapter,  except 
accident  or  casualty  corporations,  must  issue  a  contract  of  insurance 
upon  the  life  of  any  person  under  fifteen  nor  over  sixty-one  years  of  age. 
Every  such  contract  of  insurance  must  be  founded  upon  written  applica- 
tion therefor,  and,  except  where  the  application  is  for  health,  accident 
or  casulty  insurance  only,  or  for  one  hundred  dollars  life  insurance  or 
less,  such  application  must  be  accompanied  by  the  report  of  a  reputable 
physician,  containing  a  detailed  statement  of  his  examination  of  the 
applicant,  showing  the  applicant  to  be  in  good  health,  and  recommend- 
ing the  issuance  of  a  contract  of  insurance.  Any  solicitor,  agent,  em- 
ployee, examining  physician,  or  other  person,  making  a  false  or  fraudu- 
lent statement  to  any  corporation  doing  business  under  this  chapter, 
with  reference  to  any  application  for  insurance,  or  for  the  purpose  of 
obtaining  any  money  or  benefit  from  such  corporation,  is  guilty  of  a  mis- 
demeanor ;  and  any  person  who  makes  a  false  statement  of  any  material 
fact  or  thing  in  a  sworn  statement  as  to  the  death  or  disability  of  a  con- 
tract-holder, in  any  such  corporation  for  the  purpose  of  procuring  or 
aiding  the  beneficiary  or  beneficiaries  or  contract-holder  in  procuring 
the  payment  of  a  benefit  named  in  the  contract,  is  guilty  of  perjury. 

Enacted,  Stats.  1905,  p.  420. 
Exemptions  from  attachment  and  execution. 

Sec.  453A-.  The  money,  benefit,  annuity,  endowment,  charity,  relief, 
or  aid  to  be  paid  as  provided  by  the  contracts  issued  by  any  corporation 
doing  business  under  this  chapter,  is  not  liable  to  attachment  or  other 
process,  nor  to  be  seized,  taken,  appropriated  or  applied  by  any  legal  or 


LIFE,    HEALTH,    ACCIDENT,    AND   ANNUITY   INSURANCE.  55 

equitable  process,  nor  by  operation  of  law,  to  pay  any  debts  or  liability 
of  the  contract-holder  or  any  beneficiary  named  thereunder. 
Enacted,  Stats.  1905,  p.  421. 

Statements  to  be  filed  with  the  insurance  commissioner;  proceedings  to  be 
taken  by  him  thereon. 

Sec.  453Z.  Every  corporation,  whether  domestic  or  foreign,  doing 
the  business  of  effecting  insurance  on  the  assessment  plan  must,  an- 
nually, on  or  before  the  first  day  of  February,  file  with  the  insurance 
commissioner,  in  such  form  as  he  may  prescribe,  a  statement  of  its  affairs 
for  the  year  ending  on  the  preceding  thirty-first  day  of  December.  The 
insurance  commissioner,  in  person  or  by  duly  authorized  deputy,  has  the 
power  of  examination  into  the  affairs  of  any  domestic  corporation  doing 
business  or  claiming  to  do  business  under  this  chapter,  at  any  time,  in  his 
discretion,  and  must  make  such  examination  at  least  once  a  year.  If  he, 
after  an  examination  of  the  affairs  of  a  corporation,  finds  that  it  is  not 
doing  its  business  in  conformity  to  this  chapter,  or  that  it  is  doing  a 
fraudulent  or  unlawful  business,  or  that  it  is  not  carrying  out  its  terms 
of  contract,  or  that  it  can  not,  within  three  months  from  the  date  of 
notice  of  default,  pay  its  obligations,  he  must  cite  the  president,  secre- 
tary, manager  or  general  agent  of  the  corporation,  or  all  of  them,  to 
appear  before  him,  stating  the  time  and  place,  to  show  cause  why  the 
authority  of  the  corporation  to  do  business  should  not  be  revoked,  and 
if  cause  is  not  shown,  then  he  must  report  the  facts  to  the  attorney  gen- 
eral of  the  state,  who  must  commence  proceedings  in  the  proper  court  to 
restrain  the  corporation  from  doing  any  further  business. 

Enacted,  Stats.  1905,  p.  421. 

Murray  vs.  Superior  Court,  129  Cal.  628,  633. 
See  note  to  section  453e,  ante. 

Lapsing  of  policies  when  forbidden. 

Sec.  453m.  No  policy  or  certificate  issued  by  any  corporation  or 
association  doing  business  under  the  provisions  of  this  chapter  lapses  for 
the  non-payment  of  any  assessments,  dues  or  premiums,  unless  the  cor- 
poration or  association  has  first  mailed  to  the  insured  under  such  policy 
or  certificate,  at  his  or  her  last  given  post  office  address,  a  notice  setting 
forth  the  amount  to  be  paid,  and  the  time  the  same  is  due  and  payable ; 
and  such  notice  must  be  mailed  at  least  fifteen  days  before  the  assess- 
ment is  due ;  provided,  that  such  corporations  doing  business  under  this 
chapter  as  collect  specific  amounts  at  specific  dates,  as  contained  in  the 
contract,  are  not  compelled  to  send  such  notices ;  and  an  affidavit  made 
by  the  officer,  bookkeeper  or  clerk  of  any  such  corporation  having  charge 
of  the  mailing  of  notices,  setting  forth  the  facts  as  they  appear  on  the 
records  in  the  office  of  the  said  corporation,  showing  that  such  notice  was 
mailed  and  the  date  of  mailing,  is  conclusive  evidence  of  the  mailing  of 
such  notice. 

Enacted,  Stats.  1905,  p.  421. 

Fees  and  penalties. 

Sec.  453m.  The  fees  for  filing  statements,  certificates,  or  other  docu- 
ments required  by  this  chapter,  or  for  any  service  or  act  of  the  insurance 
commissioner,  and  the  penalties  for  any  violation  of  this  chapter,  must, 
except  as  otherwise  provided  herein,  be  the  same  as  provided  in  the  laws 


56  INSURANCE  LAWS  OF  CALIFORNIA. 

of  this  state  relating  to  life  insurance  companies,  and  must  be  disposed 
of  as  provided  by  such  laws. 
Enacted,  Stats'  1905,  p.  422. 

Insurance  commissioner  to  present  bills  for  certain  expenses. 

Sec.  453o.  For  all  lawful  expenses  under  this  chapter,  or  by  reason 
of  any  of  its  provisions,  in  the  prosecution  of  any  suit  or  proceeding,  or 
otherwise,  for  the  enforcement  of  the  provisions  of  this  chapter,  the 
insurance  commissioner  must  present  bills,  duly  certified  by  him,  and 
accompanied  with  vouchers,  to  the  state  board  of  examiners,  who  may 
allow  the  same,  and  direct  payment  thereof  to  be  made;  and  the  state 
controller  must  draw  warrants  therefor  on  the  state  treasurer  for  the 
payment  of  the  same  to  the  insurance  commissioner,  out  of  the  general 
fund,  in  addition  to  the  ordinary  contingent  expense. 

Enacted,  Stats.  1905,  p.  422. 

Exemption  of  fraternal  societies  from  this  chapter. 

Sec.  453p.  The  provisions  of  this  chapter  do  not  apply  to  secret  or 
fraternal  societies,  lodges  or  councils,  which  conduct  their  business  and 
secure  membership  on  the  lodge  system  exclusively,  having  ritualistic 
work  and  ceremonies  in  their  societies,  lodges  or  councils,  nor  to  any 
mutual  or  benefit  association  organized  or  formed  and  composed  of  mem- 
bers of  any  such  society,  lodge  or  council  exclusively. 

Enacted,  Stats.  1905,  p.  422. 

The  foregoing  sections  of  the  Civil  Code  (453d,  e,  f,  g,  h,  i,  j,  Jc,  I,  m,  n,  o,  p)  are  a 
codification  of  the  statutes  of  1891,  page  126,  relating  to  life,  health,  accident  and 
annuity  endowment  insurance  on  the  assessment  plan. 

DIVISION  III.    PART  IV.    TITLE  XI. 

INSURANCE. 

Chapter  I.  Insurance  in  General.     Articles  I-XII.     Sees.  2527-2649. 

II.  Marine  Insurance.     Articles  I-IX.     Sees.  2655-2746. 

III.  Fire  Insurance.     Sees.  2752-2757. 

IV.  Life  and  Health  Insurance.    Sees.  2762-2766. 

CHAPTER  I. 

INSURANCE  IN  GENERAL. 

Article  I.  Definition  of  Insurance.     Sec.  2527. 

II.  What  may  be  Insured.     Sees.  2531-2534. 

III.  Parties  to  the  Contract.     Sees.  2538-2542. 

IV.  Insurable  Interest.     Sees.  2546-2558. 

V.  Concealment  and  Representations.     Sees.  2561-2583. 
VI.  The  Policy.     Sees.  2586-2599. 

VII.  Warranties.     Sees.  2603-2612. 

VIII.  Premium.     Sees.  2616-2622. 

IX.  Loss.     Sees.  2626-2629. 

X.  Notice  of  Loss.     Sees.  2633-2637. 

XI.  Double  Insurance.     Sees.  2641-2642. 

XII.  Reinsurance.     Sees.  2646-2649. 

ARTICLE   I. 

DEFINITION  OF  INSURANCE. 

See.  2527.     Insurance,  what. 
Insurance,  what. 

Sec.  2527.  Insurance  is  a  contract  whereby  one  undertakes  to  indem- 
nify another  against  loss,  damage,  or  liability,  arising  from  an  unknown 
or  contingent  event. 

Enacted  March  21,  1872. 


INSURANCE    IN    GENERAL.  57 

The  general  rule  is  that  a  policy,  if  delivered,  takes  effect  from  its  date,  unless  it 
be  otherwise  stated,  or  unless  there  is  evidence  of  a  contrary  intent.  If  the  premium 
be  paid  and  the  policy  be  not  delivered  till  afterward,  the  policy  takes  effect  by  rela- 
tion as  of  its  date,  even  though  a  loss  intervenes.  (  Union  Ins.  Co.  vs.  American  F.  I. 
Co.,  107  Gal.  329.) 

To  the  same  effect  is  Crawford  vs.  Transatlantic,  etc.,  Co-,  125  Cal.  609. 

A  beneficiary  certificate  of  a  fraternal  association,  being  a  contract  of  insurance, 
can  not  be  impaired  in  its  obligation  by  either  party  without  the  assent  of  the  other, 
and  an  enactment  by  the  association  passed  subsequent  to  the  issuance  of  such  a  cer- 
tificate, reducing  the  amount  payable  on  outstanding  certificates,  is  not  a  regulation 
for  the  government  of  the  association,  but  an  attempt  to  repudiate  its  obligation 
under  its  contract.    (Bornstein  vs.  District  Grand  Lodge  No.  4,  2  Cal.  App.  624,  629.) 

ARTICLE  II. 

WHAT  MAY  BE  INSURED. 

Sec.  2531.  What  events  may  be  insured  against. 

2532.  Insurance  of  lottery  or  lottery  prize  unauthorized. 

2533.  Usual  kinds  of  insurance. 

2534.  All  subject  to  this  chapter. 

What  events  may  be  insured  against. 

Sec.  2531.  Any  contingent  or  unknown  event,  whether  past  or 
future,  which  may  damnify  a  person  having  an  insurable  interest,  or 
create  a  liability  against  him,  may  be  insured  against,  subject  to  the 
provisions  of  this  chapter. 

Enacted  March  21,  1872. 

See  note  to  section  2527,  ante. 
Insurance  of  lottery  or  lottery  prize  unauthorized. 

Sec.  2532.  The  preceding  section  does  not  authorize  an  insurance  for 
or  against  the  drawing  of  any  lottery,  or  for  or  against  any  chance  or 
ticket  in  a  lottery  drawing  a  prize. 

Enacted  March  21,  1872. 
Usual  kinds  of  insurance. 

Sec.  2533.     The  most  usual  kinds  of  insurance  are : 

(1)  Marine  insurance ; 

(2)  Fire  insurance ; 

(3)  Life  insurance ; 

(4)  Health  insurance ;  and, 

(5)  Accident  insurance. 
Enacted  March  21,  1872. 

All  subject  to  this  chapter. 

Sec.  2534.  All  kinds  of  insurance  are  subject  to  the  provisions  of 
this  chapter. 

Enacted  March  21,  1872. 

ARTICLE  III. 

PARTIES  TO  THE  CONTRACT. 

Sec.  2538.  Designation  of  parties. 

2539.  Who  may  insure. 

2541.  Assignment  to  mortgagee  of  policy  on  thing  insured. 

2542.  New  contract  between  insurer  and  assignee. 

Designation  of  parties. 

Sec.  2538.  The  person  who  undertakes  to  indemnify  another  by  a 
contract  of  insurance  is  called  the  insurer,  and  the  person  indemnified  is 
called  the  insured. 

Enacted  March  21,  1872. 


58  INSURANCE  LAWS  OF  CALIFORNIA. 

Who  may  insure. 

Sec.  2539.  Any  one  capable  of  making  a  contract  may  be  an  insurer, 
subject  to  the  restrictions  imposed  by  special  statutes  upon  foreign  cor- 
porations, non-residents  and  others. 

Enacted  March  21,  1872. 

Who  may  be  insured. 

Sec.  2540.     Any  one  except  a  public  enemy  may  be  insured. 
Enacted  March  21,  1872. 

Assignment  to  mortgagee  of  policy  on  thing  insured. 

Sec.  2541.  Unless  the  policy  otherwise  provides,  where  a  mortgagor 
of  property  effects  insurance  in  his  own  name  providing  that  the  loss 
shall  be  payable  to  the  mortgagee,  or  assigns  a  policy  of  insurance  to  a 
mortgagee,  the  insurance  is  deemed  to  be  upon  the  interest  of  the  mort- 
gagor, who  does  not  cease  to  be  a  party  to  the  original  contract,  and  any 
act  of  his,  prior  to  the  loss,  which  would  otherwise  avoid  the  insurance, 
will  have  the  same  effect,  although  the  property  is  in  the  hands  of  the 
mortgagee,  but  any  act,  which,  under  the  contract  of  insurance,  is  to 
be  performed  by  the  mortgagor,  may  be  performed  by  the  mortgagee 
therein  named,  with  the  same  effect  as  if  it  had  been  performed  by  the 
mortgagor. 

Enacted  March  21,  1872. 

Where  a  mortgagee  had  assigned  to  him  a  policy  of  insurance,  as  further  security 
for  the  mortage  debt,  and  afterwards  on  foreclosure  proceedings  became  the  pur- 
chaser of  the  land  and  premises  on  which  the  mortgage  was  made  for  the  full  amount 
of  his  judgment  and  costs,  it  was  decided  that  when  the  entire  indebtedness  was  thus 
discharged  his  interest  in  the  policy  was  extinguished.  (Reynolds  vs.  London,  etc., 
Ins.  Co.,  128  Cal.  16.) 

Where  mortgagor  made  fire  insurance  policy  payable  to  his  mortgagee,  as  her 
interest  may  appear,  and  policy  contained  provision  that  commencement  of  fore- 
closure proceedings  on  property  covered  would  render  policy  void,  it  was  held  that 
the  filing  of  a  complaint  in  foreclosure  did  not  defeat  right  to  recover  on  policy.  Dis- 
senting opinion,  however,  states  that  the  holding  of  the  majority  to  the  effect  that 
mortgagee  is  not  prejudiced  by  failure  of  insured  to  fulfill  the  conditions  of  his 
contract,  seems  to  nullify  the  express  provisions  of  section  2541,  Civil  Code.  (Sharp 
vs.  Scottish  Union,  etc.,  Co.,  136  Cal.  542,  547. ) 

Section  2541  of  the  Civil  Code  gives  the  rule  governing  the  effect  of  the  creation 
of  an  interest  in  a  mortgagee  or  creditor  where  the  policy  runs  to  the  mortgagor  or 
debtor,  and  does  not  apply  to  policies  which  themselves  provide  to  what  extent  its 
conditions  shall  apply  to  such  interest,  when  created.  In  an  action  to  recover  on  a 
fire  insurance  policy  by  a  creditor  whose  debt  was  secured  by  a  deed  of  trust  of  the 
property  insured  executed  after  the  issuance  of  the  policy  without  the  consent  of  the 
company,  by  virtue  of  the  mortgage  clause  in  the  body  of  the  policy  (being  the 
mortgage  clause  in  the  form  of  policy  known  as  the  "New  York  Standard  Form"), 
the  interest  of  the  mortgagee  was  free  from  all  conditions  expressed  in  the  body  of 
the  policy  not  expressly  made  applicable  at  the  time  of  creation  of  such  interest. 
(Welch  vs.  British  American,  etc.,  Co.,  148  Cal.  223,  227.) 

New  contract  between  insurer  and  assignee. 

Sec.  2542.  If  an  insurer  assents  to  the  transfer  of  an  insurance  from 
a  mortgagor  to  a  mortgagee,  and,  at  the  time  of  his  assent,  imposes  fur- 
ther obligations  on  the  assignee,  making  a  new  contract  with  him,  the 
acts  of  the  mortgagor  can  not  affect  his  rights. 

Enacted  March  21,  1872. 


INSURANCE   IN   GENERAL.  59 

ARTICLE  IV. 

INSURABLE  INTEREST. 

Sec.  2546.  Insurable  interest,  what. 

2547.  In  what  may  consist. 

2548.  Interest  of  carrier  or  depositary. 

2549.  Mere  expectancies. 

2550.  Measure  of  interest  in  property. 

2551.  Insurance  without  interest,  illegal. 

2552.  When  interest  must  exist. 

2553.  Effect  of  transfer. 
2554-  Transfer  after  loss. 

2555.  Exception  in  the  case  of  several  subjects  in  one  policy. 

2556.  In  case  of  the  death  of  the  insured. 

2557.  In  case  of  transfer  between  co-tenants. 

2558.  Policy,  when  void. 

Insurable  interest,  what. 

Sec.  2546.  Every  interest  in  property,  or  any  relation  thereto,  or 
liability  in  respect  thereof,  of  such  a  nature  that  a  contemplated  peril 
might  directly  damnify  the  insured,  is  an  insurable  interest. 

Enacted  March  21,  1872. 

Where  an  applicant  for  fire  insurance  in  the  sum  of  eight  hundred  dollars  had 
paid  the  consideration  for  the  insured  property  but  had  taken  title  in  the  name  of 
another  as  security  for  a  loan  of  five  hundred  dollars,  and  asked  for  insurance  in  the 
name  of  the  creditor,  loss,  if  any,  to  be  paid  to  applicant  as  his  interest  might  appear, 
and  policy  was  issued  with  full  knowledge  of  the  facts,  applicant  and  owner  of  legal 
title  had  each  an  insurable  interest  in  the  property,  and  policy  was  construed  as 
intended  to  insure  interests  of  both.  (Loring  vs.  Dutchess  Ins.  Co.,  1  Cal.  App. 
186,  188.) 

In  what  may  consist. 

Sec.  2547.     An  insurable  interest  in  property  may  consist  in ; 

(1)  An  existing  interest; 

(2)  An  inchoate  interest  founded  on  an  existing  interest;  or 

(3)  An  expectancy,  coupled  with  an  existing  interest  in  that  out  of 
which  the  expectancy  arises. 

Enacted  March  21,  1872. 

Interest  of  carrier  or  depositary. 

Sec.  2548.  A  carrier  or  depositary  of  any  kind  has  an  insurable 
interest  in  a  thin^  held  by  him  as  such,  to  the  extent  of  its  value. 

Enacted  March  21,  1872. 
Mere  expectancies. 

Sec.  2549.  A  mere  contingent  or  expectant  interest  in  anything,  not 
founded  on  an  actual  right  to  the  thing,  nor  upon  any  valid  contract  for 
it,  is  not  insurable. 

Enacted  March  21,  1872. 

Measure  of  interest  in  property. 

Sec.  2550.  The  measure  of  an  insurable  interest  in  property  is  the 
extent  to  which  the  insured  might  be  damnified  by  loss  or  injury  thereof. 

Enacted  March  21,  1872. 
Insurance  without  interest,  illegal. 

Sec.  2551.  The  sole  object  of  insurance  is  the  indemnity  of  the  in- 
sured, and  if  he  has  no  insurable  interest  the  contract  is  void. 

Enacted  March  21,  1872. 


60  INSURANCE  LAWS  OF  CALIFORNIA. 

When  interest  must  exist. 

Sec.  2552.  An  interest  insured  must  exist  when  the  insurance  takes 
effect,  and  when  the  loss  occurs,  but  need  not  exist  in  the  mean  time. 

Enacted  March  21,  1872. 

Effect  of  transfer. 

Sec.  2553.  Except  in  the  cases  specified  in  the  next  four  sections, 
and  in  the  cases  of  life,  accident,  and  health  insurance,  a  change  of 
interest  in  any  part  of  a  thing  insured,  unaccompanied  by  a  correspond- 
ing change  of  interest  in  the  insurance,  suspends  the  insurance  to  an 
equivalent  extent,  until  the  interest  in  the  thing  and  the  interest  in  the 
insurance  are  vested  in  the  same  person. 

Enacted  March  21,  1872. 

Transfer  after  loss. 

Sec.  2554.  A  change  of  interest  in  a  thing  insured,  after  the  occur- 
rence of  an  injury  which  results  in  a  loss,  does  not  affect  the  right  of  the 
insured  to  indemnity  for  the  loss. 

Enacted  March  21,  1872. 

Exception  in  the  case  of  several  subjects  in  one  policy. 

Sec.  2555.  A  change  of  interest  in  one  or  more  of  several  distinct 
things,  separately  insured  by  one  policy,  does  not  avoid  the  insurance  as 
to  the  others. 

Enacted  March  21,  1872. 

In  case  of  the  death  of  the  insured. 

Sec.  2556.  A  change  of  interest,  by  will  or  succession,  on  the  death 
of  the  insured,  does  not  avoid  an  insurance ;  and  his  interest  in  the  insur- 
ance passes  to  the  person  taking  his  interest  in  the  thing  insured. 

Enacted  March  21,  1872. 

In  case  of  transfer  between  co-tenants. 

Sec.  2557.  A  transfer  of  interest  by  one  of  several  partners,  joint 
owners,  or  owners  in  common,  who  are  jointly  insured,  to  the  others,  does 
not  avoid  an  insurance,  even  though  it  has  been  agreed  that  the  insur- 
ance shall  cease  upon  an  alienation  of  the  thing  insured. 

Enacted  March  21,  1872. 

Policy,  when  void. 

Sec.  2558.  Every  stipulation  in  a  policy  of  insurance  for  the  pay- 
ment of  loss  whether  the  person  insured  has  or  has  not  any  interest  in 
the  property  insured,  or  that  the  policy  shall  be  received  as  proof  of 
such  interest,  and  every  policy  executed  by  way  of  gaming  or  wagering, 
is  void. 

Enacted,  Stats.  1873-4,  p.  255. 

ARTICLE  V. 

CONCEALMENT  AND  REPRESENTATIONS. 

Sec.  2561.  Concealment,  what. 

2562.  Effect  of  concealment. 

2563.  What  must  be  disclosed. 

2564.  Matters  which  need  not  be  communicated  without  inquiry. 

2565.  Test  of  materiality. 

2566.  Matters  which  each  is  bound  to  know. 

2567.  Waiver  of  communication. 

2568.  Interest  of  insured. 


INSURANCE    IN   GENERAL.  61 

Sec.  2569.  Fraudulent  warranty. 

2570.  Matters  of  opinion. 

2571.  Representation,  what. 

2572.  When  made. 

2573.  How  interpreted. 

2574.  Representation  as  to  future. 

2575.  How  may  affect  policy. 

2576.  When  may  be  withdrawn. 

2577.  Time  intended  by  representation. 

2578.  Representing  information. 

2579.  Falsity. 

2580.  Effect  of  falsity. 

2581.  Materiality. 

2582.  Application  of  provisions  of  this  article. 

2583.  Right  to  rescind. 

Concealment,  what. 

Sec.  2561.  A  neglect  to  communicate  that  which  a  party  knows,  and 
ought  to  communicate,  is  called  a  concealment. 

Enacted  March  21,  1872. 

The  owner  of  a  cargo  of  wheat  which  was  shipped  on  a  barge,  and  which  was 
overdue,  received  information  that  a  barge  had  been  lost  that  morning,  and  imme- 
diately effected  an  insurance  on  the  cargo,  without  communicating  his  knowledge  of 
the  supposed  loss  to  the  insurer.  The  court  decided  the  same  to  be  a  fraudulent 
concealment.     {Hart  vs.  British  F.  M.  Co.,  80  Cal.  440.) 

Effect  of  concealment. 

Sec.  2562.  A  concealment,  whether  intentional  or  unintentional,  en- 
titles the  injured  party  to  rescind  a  contract  of  insurance. 

Enacted  March  21, 1872. 

See  note  to  section  2561,  ante. 
What  must  be  disclosed. 

Sec.  2563.  Each  party  to  a  contract  of  insurance  must  communicate 
to  the  other,  in  good  faith,  all  facts  within  his  knowledge  which  are  or 
which  he  believes  to  be  material  to  the  contract,  and  which  the  other  has 
not  the  means  of  ascertaining,  and  as  to  which  he  makes  no  warranty. 

Enacted  March  21, 1872. 

See  note  to  section  2561,  ante. 

Matters  which  need  not  be  communicated  without  inquiry. 

Sec.  2564.  Neither  party  to  a  contract  of  insurance  is  bound  to  com- 
municate information  of  the  matters  following,  except  in  answer  to  the 
inquiries  of  the  other : 

1.  Those  which  the  other  knows ; 

2.  Those  which,  in  the  exercise  of  ordinary  care,  the  other  ought  to 
know,  and  of  which  the  former  has  no  reason  to  suppose  him  ignorant ; 

3.  Those  of  which  the  other  waives  communication; 

4.  Those  which  prove  or  tend  to  prove  the  existence  of  a  risk  excluded 
by  a  warranty,  and  which  are  not  otherwise  material ;  and, 

5.  Those  which  relate  to  a  risk  excepted  from  the  policy,  and  which 
are  not  otherwise  material. 

Enacted  March  21, 1872. 

It  is  a  general  rule  that  when  a  stipulation  or  exception  to  a  policy  of  insurance 
emanating  from  the  insurer  is  capable  of  two  meanings,  the  one  to  be  adopted  is 
that  which  is  most  favorable  to  the  insured.  (Bayley  vs.  Employers'  L.  A.  Corp., 
125  Cal.  345.) 

Test  of  materiality. 

Sec.  2565.     Materiality  is  to  be  determined  not  by  the  event,  but 

solely  by  the  probable  and  reasonable  influence  of  the  facts  upon  the 


62  INSURANCE  LAWS  OF  CALIFORNIA. 

party  to  whom  the  communication  is  due,  in  forming  his  estimate  of  the 
disadvantages  of  the  proposed  contract,  or  in  making  his  inquiries. 
Enacted  March  21, 1872. 

Matters  which  each  is  bound  to  know. 

Sec.  2566.  Each  party  to  a  contract  of  insurance  is  bound  to  know 
all  the  general  causes  which  are  open  to  his  inquiry,  equally  with  that 
of  the  other,  and  which  may  affect  either  the  political  or  material  perils 
contemplated ;  and  all  general  usages  of  trade. 

Enacted  March  21, 1872. 

Waiver  of  communication. 

Sec.  2567.  The  right  to  information  of  material  facts  may  be 
waived,  either  by  the  terms  of  insurance  or  by  neglect  to  make  inquiries 
as  to  such  facts,  where  they  are  distinctly  implied  in  other  facts  of 
which  information  is  communicated. 

Enacted  March  21, 1872. 

Interest  of  insured. 

Sec.  2568.  Information  of  the  nature  or  amount  of  the  interest  of 
one  insured  need  not  be  communicated  unless  in  answer  to  an  inquiry, 
except  as  prescribed  by  section  2587. 

Enacted  March  21,  1872. 

Fraudulent  warranty. 

Sec.  2569.  An  intentional  and  fraudulent  omission,  on  the  part  of 
one  insured,  to  communicate  information  of  matters  proving  or  tending 
to  prove  the  falsity  of  a  warranty,  entitles  the  insurer  to  rescind. 

Enacted  March  21, 1872. 

Matters  of  opinion. 

Sec.  2570.  Neither  party  to  a  contract  of  insurance  is  bound  to  com- 
municate, even  upon  inquiry,  information  of  his  own  judgment  upon 
the  matters  in  question. 

Enacted  March  21, 1872. 

Representation,  what. 

Sec.  2571.     A  representation  may  be  oral  or  written. 
Enacted  March  21, 1872. 

Where  a  fire  insurance  policy  referred  to  a  survey  of  the  insured  property  and 
made  it  a  part  of  the  policy,  the  fact  that  the  survey  was  not  made  at  or  before  the 
execution  of  the  policy  may  have  deprived  it  of  the  quality  of  an  express  warranty, 
but  it  still  operated  as  evidence  of  representations  made  as  inducement  for  the  issu- 
ance of  the  policy,  and  as  such  was  proper  matter  to  go  to  the  jury.  (Rankin  vs. 
Amazon  Ins.  Co.,  25  Pac.  Rep.  260,  261;  89  Cal.  203  on  rehearing.) 

When  made. 

Sec.  2572.  A  representation  may  be  made  at  the  same  time  with  issu- 
ing the  policy,  or  before  it. 

Enacted  March  21, 1872. 

See  note  to  section  2571,  ante. 
How  interpreted. 

Sec.  2573.  The  language  of  a  representation  is  to  be  interpreted  by 
the  same  rules  as  the  language  of  contracts  in  general. 

Enacted  March  21, 1872.     ' 

See  note  to  section  2571,  ante. 


INSURANCE   IN    GENERAL.  63 

Representation  as  to  future. 

Sec.  2574.  A  representation  as  to  the  future  is  to  be  deemed  a  prom- 
ise, unless  it  appears  that  it  was  merely  a  statement  of  belief  or  expec- 
tation. 

Enacted  March  21, 1872. 

See  note  to  section  2571,  ante. 
How  may  affect  policy. 

Sec.  2575.  A  representation  can  not  be  allowed  to  qualify  an  express 
provision  in  a  contract  of  insurance;  but  it  may  qualify  an  implied 
warranty. 

Enacted  March  21, 1872. 

See  note  to  section  2571,  ante. 
When  may  be  withdrawn. 

Sec.  2576.  A  representation  may  be  altered  or  withdrawn  before  the 
insurance  is  effected,  but  not  afterwards. 

Enacted  March  21, 1872. 

Time  intended  by  representation. 

Sec.  2577.  The  completion  of  the  contract  of  insurance  is  the  time 
to  which  a  representation  must  be  presumed  to  refer. 

Enacted  March  21, 1872. 

See  note  to  section  2571,  ante. 
Representing  information. 

Sec.  2578.  When  a  person  insured  has  no  personal  knowledge  of  a 
fact,  he  may  nevertheless  repeat  information  which  he  has  upon  the 
subject,  and  which  he  believes  to  be  true,  with  the  explanation  that  he 
does  so  on  the  information  of  others,  or  he  may  submit  the  information, 
in  its  whole  extent,  to  the  insurer ;  and  in  neither  case  is  he  responsible 
for  its  truth,  unless  it  proceeds  from  an  agent  of  the  insured,  whose  duty 
it  is  to  give  the  intelligence. 

Falsity. 

Sec.  2579.  A  representation  is  to  be  deemed  false  when  the  facts  fail 
to  correspond  with  its  assertions  or  stipulations. 

Effect  of  falsity. 

Sec.  2580.  If  a  representation  is  false  in  a  material  point,  whether 
affirmative  or  promissory,  the  injured  party  is  entitled  to  rescind  the 
contract  from  the  time  when  the  representation  becomes  false. 

An  insured  is  not  entitled  to  sue  for  a  cancellation  of  his  policy  and  to  recover  a 
ratable  proportion  of  the  premium  paid,  without  a  provision  in  the  policy  to  that 
effect.  Section  2610,  2617  and  2619  construed.  (Joshua  Hendy  M.  Works  vs.  Insur- 
ance Co.,  86  Cal.  248.) 

The  fact  that  a  survey  of  insured  premises  was  not  delivered  until  after  the  deliv- 
ery of  the  policy  to  the  insured,  where  it  was  referred  to  in  the  policy  and  made  a 
part  thereof  in  express  terms,  did  not  justify  the  court  in  excluding  it  as  evidence. 
Sections  2583  and  2605  also  considered.  Where  the  policy  provided  that  a  watchman 
was  to  be  employed  about  the  premises  day  and  night  and  the  person  employed  did  not 
watch  the  premises  at  night  but  slept  in  a  building  about  three  hundred  yards  from 
the  premises,  the  warranty  was  not  kept.    (Rankin  vs.  Amazon  Ins.  Co.,  89  Cal.  203.) 

Materiality. 

Sec.  2581.  The  materiality  of  a  representation  is  determined  by  the 
same  rule  as  the  materiality  of  a  concealment. 

Enacted  March  21. 1872. 


64  INSURANCE  LAWS  OF  CALIFORNIA. 

Application  of  provisions  of  this  article. 

Sec.  2582.     The  provisions  of  this  article  apply  as  well  to  a  modifica- 
tion of  a  contract  of  insurance  as  to  its  original  formation. 
Enacted  March  21, 1872. 

Right  to  rescind. 

Sec.  2583.  Whenever  a  right  to  rescind  a  contract  of  insurance  is 
given  to  the  insurer  by  any  provision  of  this  chapter,  such  right  may  be 
exercised  at  any  time  previous  to  the  commencement  of  an  action  on  the 
contract. 

Enacted,  Stats.  1873-4,  p.  255. 

Rankin  vs.  Amazon  Ins.  Co.,  25  Pac.  Rep.,  260,  261 ;  89  Cal.  203,  on  rehearing. 
See  note  to  section  2580,  ante. 

ARTICLE  VI. 

THE  POLICY. 

Sec.  2586.  Policy,  what 

2587.  What  must  be  specified  in  a  policy. 

2588.  Whose  interest  is  covered. 

2589.  Insurance  by  agent  or  trustee. 

2590.  Insurance  by  part-owner. 

2591.  General  terms. 

2592.  Successive  owners. 

2593.  Transfer  of  the  thing  insured. 

2594.  Open  and  valued  policies. 

2595.  Open  policy,  what. 

2596.  Valued  policy,  what. 

2597.  Running  policy,  what. 

2598.  Effect  of  receipt. 

2599.  Agreement  not  to  transfer. 

Policy,  what. 

Sec.  2586.  The  written  instrument,  in  which  a  contract  of  insurance 
is  set  forth,  is  called  a  policy  of  insurance. 

Enacted  March  21, 1872. 

What  must  be  specified  in  a  policy. 

Sec.  2587.     A  policy  of  insurance  must  specif y : 

1.  The  parties  between  whom  the  contract  is  made ; 

2.  The  rate  of  premium ; 

3.  The  property  or  life  insured ; 

4.  The  interest  of  the  insured  in  property  insured,  if  he  is  not  the 
absolute  owner  thereof ; 

5.  The  risks  insured  against ;  and, 

6.  The  period  during  which  the  insurance  is  to  continue. 
Enacted  March  21,  1872. 

Where  a  contract  for  the  hiring  of  a  lighter  provided  for  the  payment  of  $3,500, 
after  loss,  it  was  held  to  be  a  contract  of  bailment  merely  and  not  insurance  within 
the  meaning  of  sections  2587  and  2596.  {Wilmington  Trans.  Go.  vs.  O'Neil,  98 
Cal.  1.) 

The  rule  as  to  what  constitutes  a  policy  of  insurance,  and  also  when  the  risk  shall 
commence,  considered  and  stated.  See  note  to  section  2527.  ( Union  Ins.  Co.  vs. 
American  Ins.  Co.,  107  Cal.  329 ;  Crawford  vs.  Transatlantic,  etc.,  Co.,  125  Cal.  609, 
to  same  effect.) 

Where  an  application  for  insurance  stated  fully  that  the  applicant  held  the  prem- 
ises upon  which  was  situated  the  house  insured  (afterwards  destroyed  by  fire),  under 
a  contract  to  purchase  the  same,  while  the  policy  contained  a  proviso  to  the  effect 
that  if  the  assured  was  not  the  sole  and  unconditional  owner  in  fee  of  said  property, 
the  policy  should  be  null  and  void,  making,  however,  the  application  by  reference  part 
of  the  policy,  the  court  decided  that  the  proviso  in  the  policy  could  not  defeat  an 
action  brought  thereon.  The  court,  however,  reduced  the  amount  of  the  judgment  to 
the  sum  paid  on  the  purchase  price.     (Davis  vs.  Phcenix  Ins.  Co.,  Ill  Cal.  409.) 


INSURANCE   IN    GENERAL.  65 

Whose  interest  is  covered. 

Sec.  2588.     When  the  name  of  the  person  intended  to  be  insured  is 
specified  in  a  policy,  it  can  be  applied  only  to  his  own  proper  interest. 
Enacted  March  21,  1872. 

Insurance  by  agent  or  trustee. 

Sec.  2589.  When  an  insurance  is  made  by  an  agent  or  trustee,  the 
fact  that  his  principal  or  beneficiary  is  the  person  really  insured  may  be 
indicated  by  describing  him  as  agent  or  trustee,  or  by  other  general 
words  in  the  policy. 

Enacted  March  21,  1872. 
Insurance  by  part  owner. 

Sec.  2590.  To  render  an  insurance,  effected  by  one  partner  or  part 
owner,  applicable  to  the  interest  of  his  copartners,  or  of  other  part 
owners,  it  is  necessary  that  the  terms  of  the  policy  should  be  such  as  are 
applicable  to  the  joint  or  common  interest. 

Enacted  March  21,  1872. 

General  terms. 

Sec.  2591.  When  the  description  of  the  insured  in  a  policy  is  so 
general  that  it  may  comprehend  any  person  or  any  class  of  persons,  he 
only  can  claim  the  benefit  of  the  policy  who  can  show  that  it  was  in- 
tended to  include  him. 

Enacted  March  21,  1872. 

In  an  action  brought  to  recover  unpaid  premiums  on  several  policies  of  fire  insur- 
ance on  certain  buildings  which  were  part  of  the  estate  of  one  Samuel  Hancock, 
deceased,  said  estate  being  then  in  process  of  administration  and  the  administratrix 
and  the  defendant,  Robert  Hancock,  being  the  sole  heirs  of  said  deceased.  The  policies 
purported,  respectively,  to  insure  the  estate  of  Samuel  Hancock,  deceased,  against  loss 
on  the  several  buildings  described,  the  evidence  showing  that  the  defendant,  Robert 
Hancock,  had  procured  the  policies  to  be  issued,  but  neither  himself  nor  the  admin- 
istratrix was  named  personally  in  the  policies,  and  the  latter  repudiated  the  trans- 
action. There  was  a  verdict  and  judgment  for  plaintiff,  the  defendant  claiming  he 
should  not  be  held  personally  liable  for  the  premiums.  The  supreme  court  affirmed 
the  judgment,  holding  that  the  phrase  "Estate  of  Samuel  Hancock,  deceased,"  suffi- 
ciently covered  the  interest  of  the  defendant  in  the  property,  and  that  although  he 
had  no  authority  to  procure  insurance  for  the  administratrix,  yet  she  could  have  rati- 
fied his  act,  even  after  the  occurrence  of  a  loss.  (Phoenix  Insurance  Go.  vs.  Han- 
cock, 123  Cal.  222.) 

Successive  owners. 

Sec.  2592.  A  policy  may  be  so  framed  that  it  will  inure  to  the  benefit 
of  whomsoever,  during  the  continuance  of  the  risk,  may  become  the 
owner  of  the  interest  insured. 

Enacted  March  21,  1872. 

Transfer  of  the  thing  insured. 

Sec.  2593.  The  mere  transfer  of  a  thing  insured  does  not  transfer 
the  policy,  but  suspends  it  until  the  same  person  becomes  the  owner  of 
both  the  policy  and  the  thing  insured. 

Enacted  March  21,  1872. 

Open  and  valued  policies. 

Sec.  2594.     A  policy  is  either  open  or  valued. 
Enacted  March  21,  1872. 

Open  policy,  what. 

Sec.  2595.  An  open  policy  is  one  in  which  the  value  of  the  thing  in- 
sured is  not  agreed  upon,  but  is  left  to  be  ascertained  in  case  of  loss. 

Enacted  March  21,  1872. 
5— IN 


66  INSURANCE  LAWS  OF  CALIFORNIA. 

Valued  policy,  what. 

Sec.  2596.  A  valued  policy  is  one  which  expresses  on  its  face  an 
agreement  that  the  thing  insured  shall  be  valued  at  a  specified  sum. 

Enacted  March  21, 1872. 

Wilmington  T.  Co.  vs.  O'Neil,  98  Cal.  1,  7. 
See  note  to  section  2587,  ante. 

Running  policy,  what. 

Sec.  2597.  A  running  policy  is  one  which  contemplates  successive 
insurances,  and  which  provides  that  the  object  of  the  policy  may  be  from 
time  to  time  defined,  especially  as  to  the  subjects  of  insurance,  by  addi- 
tional statements  or  indorsements. 

Enacted  March  21, 1872. 

Effect  of  receipt. 

Sec.  2598.  An  acknowledgment  in  a  policy  of  the  receipt  of  pre- 
mium is  conclusive  evidence  of  its  payment,  so  far  as  to  make  the  policy 
binding,  notwithstanding  any  stipulation  therein  that  it  shall  not  be 
binding  until  the  premium  is  actually  paid. 

Enacted  March  21, 1872. 

An  agent  for  an  insurance  company  delivered  a  policy  for  one  thousand  dollars  to 
the  owner  of  a  barn,  and  at  the  same  time  agreed,  verbally,  to  credit  the  owner  on 
the  premium  for  a  period  of  five  months.  The  barn  was  destroyed  by  fire  before  the 
period  of  credit  expired,  and  the  company  refused  to  pay  the  loss,  for  the  reason  that 
the  agent  had  exceeded  his  authority  in  granting  a  longer  time  of  credit  than  sixty 
days.  The  policy  contained  no  express  acknowledgment  of  payment,  but  recited  a 
consideration.  It  did  not  contain,  however,  a  proviso  that  the  company  should  not  be 
liable  by  virtue  of  the  policy,  or  any  renewal  thereof,  until  the  premium  therefor  had 
been  actually  paid.  On  appeal  the  supreme  court  decided  that  the  agent  having 
authority  to  grant  a  credit  on  the  premium  the  unconditional  delivery  of  the  policy  by 
him  to  the  owner  waived  the  general  provision  of  non-liability  until  after  payment  of 
the  premium  contained  in  the  policy.     (Farnum  vs.  Phcenix  Ins.  Co.,  83  Cal.  246.) 

In  a  similar  case  and  upon  a  like  policy,  where  promissory  notes  were  given  for 
the  premium,  and  where  the  policy  recited  that  the  premium  had  been  paid,  it  was 
decided  that  the  company  was  estopped  to  deny  payment,  and  that  the  proviso  for 
non-liability  of  the  company  until  after  actual  payment  of  the  premium  set  forth  in 
the  policy,  was  waived.      (Palmer  vs.  Continental  Ins.  Co.,  132  Cal.  68.) 

Agreement  not  to  transfer. 

Sec.  2599.  An  agreement  made  before  a  loss,  not  to  transfer  the 
claim  of  a  person  insured  against  the  insurer,  after  the  loss  has  hap- 
pened, is  void. 

Enacted  March  21,  1872. 

ARTICLE  VII. 

WARRANTIES. 

Sec.  2603.  Warranty,  express  or  implied. 

2604.  Form. 

2605.  Express  warranties  to  be  in  policy. 

2606.  Past,  present,  and  future  warranties. 

2607.  Warranty  as  to  past  or  present 

2608.  Warranty  as  to  the  future. 

2609.  Performance  excused. 

2610.  What  acts  avoid  the  policy. 

2611.  Policy  may  provide  for  avoidance. 

2612.  Breach  without  fraud. 

Warranty,  expressed  or  implied. 

Sec.  2603.     A  warranty  is  either  expressed  or  implied. 
Enacted  March  21, 1872. 

A  policy  of  insurance  on  a  combined  harvester  provided  that  risk  assumed  should 
be  while  in  use  in  Tulare  County.  It  was  destroyed  by  fire  while  not  in  use,  but 
while  housed  in  a  shed.  It  was  decided  by  the  court  that  the  company  was  not  liable 
on  the  policy.     (Slinkard  vs.  Manchester,  etc.,  Co.,  122  Cal.  595.) 


INSURANCE   IN   GENERAL.  67 

Form. 

Sec.  2604.     No  particular  form  of  words  is  necessary  to  create  a 
warranty. 
Express  warranties  to  be  in  policy. 

Sec.  2605.  Every  express  warranty,  made  at  or  before  the  execution 
of  a  policy,  must  be  contained  in  the  policy  itself,  or  in  another  instru- 
ment signed  by  the  insured  and  referred  to  in  the  policy,  as  making  a 
part  of  it. 

Enacted  March  21,  1872.    Amended,  Stats.  1873,  p.  255. 

Rankin  vs.  Amazon  F.  Ins.  Co.,  25  Pac.  Rep.,  260,  261 ;  89  Cal.  203,  on  rehearing. 

See  note  to  section  2580,  ante. 

Past,  present  and  future  warranties. 

Sec.  2606.  A  warranty  may  relate  to  the  past,  the  present,  the 
future,  or  to  any  or  all  of  these. 

Enacted  March  21,  1872. 

A  stipulation  in  a  fire  policy  that  the  insurance  company  should  not  be  liable  for 
loss  caused  directly  or  indirectly  by  order  of  any  civil  authority,  is  not  a  warranty, 
but  where  the  supervisors  of  a  county  ordered  fires  to  start  to  destroy  insects,  the  fact 
that  such  supervisors  had  authority  under  the  law  to  start  the  fires,  was  sufficient  to 
relieve  an  insurer  of  grain  destroyed  thereby  from  liability  under  a  provision  of  the 
policy  that  the  insurer  should  not  be  liable  for  loss  occasioned  by  order  of  any  civil 
authority,  although  the  burning  of  the  grain  was  occasioned  by  the  fire  getting  beyond 
control.     (Conner  vs.  Manchester  Assur.  Co.,  130  Fed.  Rep.  740,  743-4.) 

Warranty  as  to  past  or  present. 

Sec.  2607.  A  statement  in  a  policy,  of  a  matter  relating  to  the  person 
or  thing  insured,  or  to  the  risk,  as  a  fact,  is  an  express  warranty  thereof. 

Enacted  March  21, 1872. 

The  statement  in  a  policy  to  the  effect  that  the  insurers  were  the  owners  of  the 
property  insured,  while  in  fact  they  were  stockholders  and  creditors  of  a  corporation, 
which  was  solvent;  held  to  make  the  policy  void.  (McCormick  vs.  Springfield  F.  & 
M.  I.  Co.,  66  Cal.  361.) 

Overvaluation,  failure  to  keep  a  watchman,  and  leasing  without  consent,  held  to 
avoid  policy  in  which  such  conditions  were  contained.  Sections  2607  and  2612  cited. 
(Wenzel  vs.  Commercial  Ins.  Co.,  67  Cal.  438.) 

Where  insured  made  a  statement  to  the  insuring  company  that  the  property  about 
to  be  insured  had  been  leased  to  a  certain  firm  which  lease  was  merely  verbal  held 
out  to  vitiate  the  policy.     (National  Bank  vs.  Union  Ins.  Co.,  88  Cal.  497.) 

Conner  vs.  Manchester  Assur.  Co.,  130  Fed.  Rep.  740-744. 

See  note  to  section  2606,  ante. 

Warranty  as  to  the  future. 

Sec.  2608.  A  statement  in  a  policy,  which  imports  that  it  is  intended 
to  do  or  not  to  do  a  thing  which  materially  affects  the  risk,  is  a  warranty 
that  such  act  or  omission  shall  take  place. 

Enacted  March  21, 1872. 

An  action  commenced  against  a  surety  company  resulted  in  favor  of  the  company, 
a  judgment  of  nonsuit  having  been  entered.  The  action  was  on  a  bond  to  indemnify 
an  employer  against  the  dishonesty  of  his  cashier  and  bookkeeper.  In  his  application 
for  the  bond,  in  answer  to  questions,  he  stated  that  all  the  books  and  accounts  of  his 
employee  would  be  examined  and  audited,  and  all  moneys,  securities,  vouchers,  and 
property  also  would  be  examined  and  verified,  by  himself  daily,  and  that  these  answers 
and  representations  were  true  and  should  be  held  to  form  the  basis  of  the  contract  for 
the  proposed  bond.  During  an  absence  of  four  days  of  the  employer  the  cashier 
absconded  with  his  employer's  money.  In  affirming  the  judgment  on  an  appeal  there- 
from, the  supreme  court  said :  "It  is  apparent  at  a  glance  that  the  employer  com- 
mitted a  breach  of  the  contract  of  indemnity  in  failing  to  examine  the  books,  etc., 
for  four  days."     (Young  vs.  Pacific  Surety  Co.,  137  Cal.  596.) 

Conner  vs.  Manchester  Assur.  Co.,  130  Fed.  Rep.  743-744. 

See  note  to  section  2606,  ante. 

Performance  excused. 

Sec.  2609.  When,  before  the  time  arrives  for  the  performance  of  a 
warrant}^  relating  to  the  future,  a  loss  insured  against  happens,  or  per- 


68  INSURANCE  LAWS  OF  CALIFORNIA. 

formance  becomes  unlawful  at  the  place  of  the  contract,  or  impossible, 
the  omission  to  fulfill  the  warranty  does  not  avoid  the  policy. 
Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  255. 

What  acts  avoid  the  policy. 

Sec.  2610.  The  violation  of  a  material  warranty,  or  -  other  material 
provision  of  a  policy,  on  the  part  of  either  party  thereto,  entitles  the 
other  to  rescind. 

Enacted  March  21,  1872. 

Joshua  Hendy  M.  Works  vs.  American  S.  B.  Ins.  Co.,  86  Cal.  248,  251. 
See  note  to  section  2580,  ante. 

Policy  may  provide  for  avoidance. 

Sec.  2611.  A  policy  may  declare  that  a  violation  of  specified  pro- 
visions thereof  shall  avoid  it,  otherwise  the  breach  of  an  immaterial 
provision  does  not  avoid  the  policy. 

Enacted  March  21, 1872. 

See  note  to  section  2607,  ante. 

The  ordinary  negligence  of  the  insured  and  his  agents  is  a  risk  which  the  insurer 
takes  upon  himself,  and  the  existence  of  which  does  not  absolve  him  from  liability. 
But  where  the  insured  warranted,  in  case  the  property  insured  was  idle  and  not  in 
use,  to  have  a  watchman  on  duty  constantly  day  and  night  in  and  immediately  about 
the  buildings  or  works,  he  bound  himself  to  the  performance  of  specific  acts  from 
which  no  negligence  could  exonerate  him,  regardless  of  whether  material  to  the  risk 
or  not.     {McKenzie  vs.  Scottish  TJ.  &  N.  Ins.  Co.,  112  Cal.  548,  558-9.) 

See  note  to  section  2629,  post. 

So  where  a  policy  provided  that  it  should  be  void  if  dynamite  were  kept,  used  or 
allowed  on  the  premises,  a  violation  of  such  condition  precluded  a  recovery  on  the 
policy  though  the  dynamite  did  not  cause  the  fire.  (Bastian  vs.  British  American, 
etc.,  Co.,  143  Cal.  287,  291.) 

Where  a  tender  of  premium  and  all  sums  due  was  made  within  a  reasonable  time 
after  premium  was  due,  the  action  of  the  company  in  refusing  to  accept  payment  on 
the  ground  that  policy  had  been  forfeited,  was  upheld.  (D'Orlu  vs.  Bankers'  & 
Merchants'  M.  L.  Assn,  46  Fed.  Rep.  355,  356. ) 

Breach  without  fraud. 

Sec.  2612.  A  breach  of  warranty,  without  fraud,  merely  exonerates 
an  insurer  from  the  time  that  it  occurs,  or  where  it  is  broken  in  its  in- 
ception prevents  the  policy  from  attaching  to  the  risk. 

Enacted  March  21,  18.72". 

See  note  to  section  2607,  ante. 

ARTICLE    VIII. 

PREMIUM. 

Sec.  2616.  When  premium  is  earned. 

2617.  Return  of  premium. 

2618.  When  not  allowed. 

2619.  Return  for  fraud. 

2620.  Over-insurance  by  several  insurers. 

2621.  Contribution. 

2622.  Proportionate  contribution. 

When  premium  is  earned. 

Sec.  2616.  An  insurer  is  entitled  to  payment  of  the  premium  as 
soon  as  the  thing  insured  is  exposed  to  the  peril  insured  against. 

Joshua  Hendy  M.  Works  vs.  American  8.  B.  Ins.  Co.,  86  Cal.  248,  252. 

See  note  to  section  2580,  ante. 

Return  of  premium. 

Sec.  2617.  A  person  insured  is  entitled  to  a  return  of  premium,  as 
follows : 

1.  To  the  whole  premium,  if  no  part  of  his  interest  in  the  thing  in- 
sured be  exposed  to  any  of  the  perils  insured  against. 


INSURANCE    IN    GENERAL.  69 

2.  Where  the  insurance  is  made  for  a  definite  period  of  time,  and  the 
insured  surrenders  his  policy,  to  such  proportion  of  the  premium  as 
corresponds  with  the  unexpired  time,  after  deducting  from  the  whole 
premium  any  claim  for  loss  or  damage  under  the  policy  which  has  pre- 
viously accrued. 

Enacted  March  21,  1872.    Amended  Stats.  1873-4,  p.  256. 

Joshua  Hendy  M.  Works  vs.  American  8.  B.  Ins.  Co.,  86  Cal.  248,  252. 

See  note  to  section  2580,  ante. 

Under  an  agreement  between  an  insurance  company  and  its  general  agents  whereby 
the  agents  were  to  receive  as  compensation  thirty-five  per  cent  of  the  gross  premiums 
"after  deducting  all  return  premiums,  rebates  and  reinsurances,"  they  were  properly 
chargeable  with  all  return  premiums  on  surrendered  policies  after  being  credited  with 
thirty-five  per  cent  of  the  full  amount  of  insurance  written  by  them,  and  as  this 
arrangement  necessarily  contemplated  that  return  premiums  might  be  payable  after 
the  termination  of  the  agency,  there  could  be  no  immediate  settlement  of  accounts  on 
termination  of  the  agency.  (Milwaukee  Mechanics'  Ins.  Co.  vs.  Warren.  150  Cal.  346, 
354.) 

When  not  allowed. 

Sec.  2618.  If  a  peril  insured  against  has  existed,  and  the  insurer 
has  been  liable  for  any  period,  however  short,  the  insured  is  not  entitled 
to  return  of  premiums,  so  far  as  that  particular  risk  is  concerned. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  256. 

Joshua  Hendy  M.  Works  vs.  American  8.  B.  Ins.  Co.,  86  Gal.  248,  252. 
See  note  to  section  2580,  ante. 

Return  for  fraud. 

Sec.  2619.  A  person  insured  is  entitled  to  a  return  of  the  premium 
when  the  contract  is  voidable,  on  account  of  the  fraud  or  misrepresenta- 
tion of  the  insurer,  or  on  account  of  facts,  of  the  existence  of  which  the 
insured  was  ignorant  without  his  fault ;  or  when,  by  any  default  of  the 
insured  other  than  actual  fraud,  the  insurer  never  incurred  any  liability 
under  the  policy. 

Enacted  March  21,  1872. 

Joshua  Hendy  M.  Works  vs.  American  8.  B.  Ins.  Co.,  86  Cal.  248,  252. 
See  note  to  section  2580,  ante. 

Over-insurance  by  several  insurers. 

Sec.  2620.  In  case  of  an  over-insurance  by  several  insurers,  the  in- 
sured is  entitled  to  a  ratable  return  of  the  premium,  proportioned  to  the 
amount  by  which  the  aggregate  sum  insured  in  all  the  policies  exceeds 
the  insurable  value  of  the  thing  at  risk. 

Enacted  March  21, 1872. 

Contribution. 

Sec.  2621.  When  an  over-insurance  is  effected  by  simultaneous 
policies,  the  insurers  contribute  to  the  premium  to  be  returned  in  pro- 
portion to  the  amount  insured  by  their  respective  policies. 

Enacted  March  21, 1872. 

Proportionate  contribution. 

Sec.  2622.  When  an  over-insurance  is  effected  by  successive  policies, 
those  only  contribute  to  a  return  of  the  premium  who  are  exonerated  by 
prior  insurances  from  the  liability  assumed  by  them,  and  in  proportion 
as  the  sum  for  which  the  premium  was  paid  exceeds  the  amount  for 
which,  on  account  of  prior  insurance,  they  could  be  made  liable. 

Enacted  March  21,  1872. 


70  INSURANCE  LAWS  OF  CALIFORNIA. 

ARTICLE  IX. 

LOSS. 

Sec.  2626.  Perils  remote  and  proximate. 

2627.  Loss  incurred  in  rescue  from  peril. 

2628.  Excepted  perils. 

2629.  Negligence  and  fraud. 

Perils,  remote  and  proximate. 

Sec.  2626.  An  insurer  is  liable  for  a  loss  of  which  a  peril  insured 
against  was  the  proximate  cause ;  although  a  peril  not  contemplated  by 
the  contract  may  have  been  a  remote  cause  of  the  loss;  but  he  is  not 
liable  for  a  loss  of  which  the  peril  insured  against  was  only  a  remote 
cause. 

Enacted  March  21, 1872. 

Loss  incurred  in  rescue  from  peril. 

Sec.  2627.  An  insurer  is  liable  where  the  thing  insured  is  rescued 
from  a  peril  insured  against,  that  would  otherwise  have  caused  a  loss,  if 
in  the  course  of  such  rescue  the  thing  is  exposed  to  a  peril  not  insured 
against,  which  permanently  deprives  the  insured  of  its  possession,  in 
whole  or  in  part;  or  where  a  loss  is  caused  by  efforts  to  rescue  the  thing 
insured  from  a  peril  insured  against. 

Enacted  March  21, 1872. 

Excepted  perils. 

Sec.  2628.  Where  a  peril  is  specially  excepted  in  a  contract  of  insur- 
ance, a  loss,  which  would  not  have  occurred  but  for  such  peril,  is  thereby 
excepted;  although  the  immediate  cause  of  the  loss  was  a  peril  which 
was  not  excepted. 

Enacted  March  21, 1872. 

Negligence  and   fraud. 

Sec.  2629.  An  insurer  is  not  liable  for  a  loss  caused  by  the  wilful 
act  of  the  insured ;  but  he  is  not  exonerated  by  the  negligence  of  the  in- 
sured, or  of  his  agents  or  others. 

Enacted  March  12, 1872.    Amended,  Stats.  1873-4,  p.  256. 

See  note  to  section  2580,  ante. 

A  policy  of  insurance  provided  that  a  watchman  should  be  kept  in  and  upon  the 
premises  insured  day  and  night.  The  lower  court  found  that  a  watchman  wus  not 
kept  thereon  from  and  after  the  hour  of  ten  o'clock  nightly  until  an  early  hour  of 
each  morning  thereafter,  and  that  no  watchman  was  in  or  upon  said  premises  at  the 
hour  of  ten  o'clock  of  the  night  when  the  fire  occurred.  It  was  claimed  by  the  plain- 
tiff that  the  insurer  was  not  exonerated  in  consequence  of  the  negligence  of  the 
watchman,  but  the  court  decided  that  plaintiff  could  not  recover.  {Trojan  M.  Co.  vs. 
Fireman's  Ins.  Co.,  67  Cal.  27.) 

Where  a  watchman  was  employed,  and  at  the  time  the  fire  occurred  he  was  stand- 
ing on  a  tramway  sixty-five  feet  away  from  the  mill  insured,  but  on  higher  ground, 
the  warranty  was  held  to  be  complied  with.  (Sierra  Milling,  etc.,  Co.  vs.  Hartford 
Fire  Ins.  Co.,  76  Cal.  237.) 

A  warranty  contained  in  a  policy  of  insurance  of  a  sawmill  provided  that  in  case 
the  mill  was  shut  down  one  or  more  watchmen  should  be  on  duty,  constantly,  day  and 
night,  in  and  immediately  about  the  buildings  and  works;  and  further,  that  if  the 
buildings  and  works  should  remain  idle  for  more  than  thirty  days  notice  thereof 
should  be  given  to  the  insurer.  The  mill  was  shut  down  for  more  than  three  months, 
and  the  watchman  employed  did  not  remain  on  duty  later  than  ten  o'clock  each  night, 
when  he  retired.  He  slept  in  a  house  about  three  hundred  yards  away,  from  which 
the  mill  was  only  partially  visible.  The  mill  was  destroyed  by  fire  at  11 :15  o'clock 
in  the  night.  Notice  that  the  mill  had  been  idle  was  not  given.  The  court  held  that 
both  warranties  had  been  violated  and  that  plaintiff  was  not  entitled  to  recover. 
(McKenzie  vs.  Scottish  U.  &  N.  Ins.  Co.,  112  Cal.  548.) 

Where  an  insurance  company  was  sued  for  loss  of  an  insured  vessel  wrecked  by 
floating  ice  in  Behring  sea,  an  allegation  in  the  answer  that  the  vessel  was  sailed  into 


INSURANCE   IN    GENERAL.  71 

the  ice  with  knowledge  of  the  danger  to  be  encountered,  is  not  an  allegation  that  the 
loss  was  caused  by  the  wilful  act  of  the  insured,  but  an  allegation  of  negligent  devia- 
tion, which  would  constitute  no  defense  to  liability.  (Nome  Beach  L.  &  T.  Co.  vs. 
Munich  Assur.  Co.,  123  Fed.  Rep.  820.) 

The  conduct  of  the  master  of  a  vessel  on  a  voyage  to  Alaska  in  forcing  vessel 
through  floating  ice  with  knowledge  of  the  danger,  was  not  mere  negligence,  but  wil- 
ful omission  to  perform  his  legal  duty.  (Standard  Marine  Ins.  Co.  vs.  Nome  Beach 
L.  &  T.  Co.,  133  Fed.  Rep.  636.) 

ARTICLE  X. 

NOTICE  OF  LOSS. 

Sec.  2633.  Notice  of  loss. 

2634.  Preliminary  proofs. 

2635.  Waivers  of  defects  in  notice,  etc. 

2636.  Waiver  of  delay. 

2637.  Certificate,  when  dispensed  with. 

Notice  of  loss. 

Sec.  2633.  In  case  of  loss  upon  an  insurance  against  fire,  an  insurer 
is  exonerated,  if  notice  thereof  be  not  given  to  him  by  some  person 
insured,  or  entitled  to  the  benefit  of  the  insurance,  without  unnecessary- 
delay. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  256. 

Preliminary  proofs. 

Sec.  2634.  "When  preliminary  proof  of  loss  is  required  by  a  policy, 
the  insured  is  not  bound  to  give  such  proof  as  would  be  necessary  in  a 
court  of  justice;  but  it  is  sufficient  for  him  to  give  the  best  evidence 
which  he  has  in  his  power  at  the  time. 

Enacted  March  21,  1872. 

Waivers  of  defects  in  notice,  etc. 

Sec.  2635.  All  defects  in  a  notice  of  loss,  or  in  preliminary  proof 
thereof,  which  the  insured  might  remedy,  and  which  the  insurer  omits 
to  specify  to  him,  without  unnecessary  delay,  as  grounds  of  objection, 
are  waived. 

Enacted  March  21,  1872. 

At  the  trial  of  an  action  to  recover  upon  an  insurance  policy,  it  was  contended 
that  the  insurer  was  entitled  to  an  instruction  to  the  jury  to  the  effect  that  if  they 
found  that  the  plaintiff,  in  his  proof  of  loss  made  to  the  company,  had  made  any  false 
statements,  he  could  not  recover;  also,  that  the  plaintiff  could  not  recover  if  they 
found  that  plaintiff  had  refused  to  submit  the  matter  of  loss  to  arbitration.  On 
appeal  the  supreme  court  sustained  the  action  of  the  lower  court,  holding  that  fraud 
had  not  been  properly  charged  or  pleaded,  and  that  the  stipulation  which  provided 
for  arbitration  was  too  indefinite.     (Qreiss  vs.  State  Inv.  Ins.  Co.,  98  Cal.  241.) 

Waiver  of  Delay. 

Sec.  2636.  Delay  in  the  presentation  to  an  insurer  of  notice  or 
proof  of  loss  is  waived,  if  caused  by  any  act  of  his,  or  if  he  omits  to 
make  objection  promptly  and  specifically  upon  that  ground. 

Enacted  March  21,  1872. 

Certificate,  when  dispensed  with. 

Sec.  2637.  If  a  policy  requires,  by  way  of  preliminary  proof  of 
loss,  the  certificate  or  testimony  of  a  person  other  than  the  insured,  it 
is  sufficient  for  the  insured  to  use  reasonable  diligence  to  procure  it,  and 
in  case  of  the  refusal  of  such  person  to  give  it,  then  to  furnish  reason- 
able evidence  to  the  insurer  that  such  refusal  was  not  induced  by  any 
just  grounds  of  disbelief  in  the  facts  necessary  to  be  certified. 

Enacted  March  21,  1872. 

A  policy  of  insurance  provided  that  in  case  of  loss  the  insured  should  forthwith 
give  notice  thereof  and  should  also  produce  a  certificate  under  the  hand  and  seal  of 


72  INSURANCE  LAWS  OF  CALIFORNIA. 

the  nearest  magistrate  or  notary  public  not  concerned  in  the  loss,  nor  related  to  the 
assured,  stating  that  he  had  examined  the  circumstances  attending  the  loss,  knew  the 
character  and  circumstances  of  the  assured,  and  verily  believed  that  the  loss  had 
been  sustained  without  fraud.  The  nearest  magistrate  refused  to  make  the  certifi- 
cate required,  for  the  reason  that  he  had  been  employed  by  the  company  to  take  some 
affidavits,  and  another  signed  the  same.  Under  these  circumstances  the  certificate 
was  held  by  the  court  to  have  been  properly  made  and  furnished.  (Noone  vs.  Trans- 
atlantic F.  Ins.  Co.,  88  Cal.  152.) 

ARTICLE  XL 

DOUBLE  INSURANCE. 

Sec.  2641.     Double  insurance. 

2642.     Contribution  in  case  of  double  insurance. 

Double  insurance. 

Sec.  2641.  A  double  insurance  exists  where  the  same  person  is 
insured  by  several  insurers  separately  in  respect  to  the  same  subject 
and  interest. 

Enacted  March  21,  1872. 

Contribution  in  case  of  double  insurance. 

Sec.  2642.  In  case  of  double  insurance,  the  several  insurers  are 
liable  to  pay  losses  thereon  as  follows : 

1.  In  fire  insurance,  each  insurer  must  contribute  ratably  towards 
the  loss,  without  regard  to  the  dates  of  the  several  policies. 

2.  In  marine  insurance,  the  liability  of  the  several  insurers  for  a 
total  loss,  whether  actual  or  constructive,  where  the  policies  are  not 
simultaneous,  is  in  the  order  of  the  dates  of  the  several  policies;  no 
liability  attaching  to  a  second  or  other  subsequent  policy,  except  as  to 
the  excess  of  the  loss  over  the  amount  of  all  previous  policies  on  the 
same  interest.  If  two  or  more  policies  bear  date  upon  the  same  day, 
they  are  deemed  to  be  simultaneous,  and  the  liability  of  insurers  on 
simultaneous  policies,  is  to  contribute  ratably  with  each  other.  The 
insolvency  of  any  of  the  insurers  does  not  affect  the  proportionate 
liability  of  the  other  insurers.  The  liability  of  all  insurers  on  the  same 
marine  interest  for  a  partial  or  average  loss,  is  to  contribute  ratably. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  257. 

ARTICLE  XII. 

REINSURANCE. 

Sec.  2646.  Reinsurance,  what. 

2647.  Disclosures  required. 

2648.  Reinsurance  presumed  to  be  against  liability. 

2649.  Original  insured  has  no  interest. 

Reinsurance,   what. 

Sec.  2646.     A  contract  of  reinsurance  is  one  by  which  an  insurer 
procures  a  third  person  to  insure  him  against  loss  or  liability  by  reason 
of  such  original  insurance. 
Enacted  March  21,  1872. 

After  notice  of  loss  the  insurer  and  reinsurer  consulted  and  agreed  that  the  claim 
was  illegal  and  should  be  contested.  On  suit  being  brought  the  original  insurer  aban- 
doned its  defense  and  compromised  without  notice  to  the  reinsurer.  The  reinsurer 
was  held  to  be  exonerated.  (Commercial  Union  Assurance  Co.  vs.  American  Central 
Insurance  Co.,  68  Cal.  430.) 

Where  policy  of  reinsurance  provides  for  no  past  loss,  it  will  not  be  given  a  retro- 
spective effect.     (Union  Ins.  Co.  vs.  American  F.  Ins.  Co.,  107  Cal.  327.) 

Where  a  contract  by  which  one  insurance  company  assumes  all  the  policies  and 
risks  of  another  like  company,  the  former  is  primarily  liable  to  the  insured,  and  in 


MARINE    INSURANCE.  73 

case  of  loss  may  be  sued  directly  on  its  obligation  by  the  insured.      ( Whitney  vs. 
American  Ins.  Co.,  127  Cal.  464.) 

Disclosures  required. 

Sec.  2647.  Where  an  insurer  obtains  reinsurance,  he  must  commu- 
nicate all  the  representations  of  the  original  insured,  and  also  all  the 
knowledge  and  information  he  possesses,  whether  previously  or  subse- 
quently acquired,  which  are  material  to  the  risk. 

Enacted  March  21,  1872. 
Reinsurance  presumed  to  be  against  liability. 

Sec.  2648.  A  reinsurance  is  presumed  to  be  a  contract  of  indemnity 
against  liability,  and  not  merely  against  damage. 

Enacted  March  21,  1872. 

Union  Ins.  Go.  vs.  American  F.  Ins.  Co.,  107  Cal.  327,  330. 
See  note  to  section  2646,  ante. 

Original  insured  has  no  interest. 

Sec.  2649.  The  original  insured  has  no  interest  in  a  contract  of 
reinsurance. 

Enacted  March  21,  1872. 

Commercial  Union  Assur.  Co.  vs.  American  Cent.  Ins.  Co.,  68  Cal.  431,  433. 

See  note  to  section  2646,  ante. 

CHAPTER  II. 

MARINE  INSURANCE. 

Article         I.  Definition  of  Marine  Insurance.     Sec.  2655. 

II.  Insurable  Interest.     Sees.  2659-2665. 

III.  Concealment.     Sees.  2669-2672. 

IV.  Representation.     Sees.  2676-2677. 

V.  Implied  Warranties.     Sees.  2681-2688. 

VI.  The  Voyage,  and  Deviation.     Sees.  2692-2697. 

VII.  Loss.     Sees.  2701-2712. 

VIII.  Abandonment.     Sees.  2716-2732. 

IX.     Measure  of  Indemnity.     Sees.  2736-2746. 

ARTICLE  I. 

DEFINITION  OF  MARINE  INSURANCE. 

Sec.  2655.     Marine  insurance,  what. 
Marine  insurance,  what. 

Sec.  2655.  Marine  insurance  is  an  insurance  against  risks  con- 
nected with  navigation,  to  which  a  ship,  cargo,  freightage,  profits,  or 
other  insurable  interest  in  movable  property,  may  be  exposed  during 
a  certain  voyage  or  a  fixed  period  of  time. 

Enacted  March  21,  1872. 

ARTICLE  II. 

INSURABLE  INTEREST. 

Sec.  2659.  Insurable  interest  in  a  ship. 

2660.  Interest  reduced  by  bottomry. 

2661.  Freightage,  what. 

2662.  Expected  freightage. 

2663.  Interest  in  expected  freightage,  what. 

2664.  Insurable  interest  in  profits. 

2665.  Insurable  interest  of  charterer. 

Insurable  interest  in  a  ship. 

Sec.  2659.  The  owner  of  a  ship  has  in  all  cases  an  insurable  interest 
in  it,  even  when  it  has  been  chartered  by  one  who  covenants  to  pay  him 
its  value  in  case  of  loss. 

Enacted  March  21,  1872. 


74  INSURANCE  LAWS  OF  CALIFORNIA. 

Interest  reduced  by  bottomry. 

Sec.  2660.  The  insurable  interest  of  the  owner  of  a  ship  hypothe- 
cated by  bottomry  is  only  the  excess  of  its  value  over  the  amount  secured 
by  bottomry. 

Enacted  March  21,  1872. 
Freightage,  what. 

Sec.  2661.  Freightage,  in  the  sense  of  a  policy  of  marine  insurance, 
signifies  all  the  benefit  derived  by  the  owner,  either  from  the  chartering 
of  the  ship  or  its  employment  for  the  carriage  of  his  own  goods  or  those 
of  others. 

Enacted  March  21,  1872. 
Expected  freightage. 

Sec.  2662.  The  owner  of  a  ship  has  an  insurable  interest  in  expected 
freightage  which  he  would  have  certainly  earned  but  for  the  interven- 
tion of  a  peril  insured  against. 

Enacted  March  21,  1872. 

Interest  in  expected  freightage,  what. 

Sec.  2663.  The  interest  mentioned  in  the  last  section  exists,  in  the 
case  of  a  charter-party,  when  the  ship  has  broken  ground  on  the  char- 
tered voyage,  and  if  a  price  is  to  be  paid  for  the  carriage  of  goods  when 
they  are  actually  on  board,  or  there  is  some  contract  for  putting  them  on 
board,  and  both  ship  and  goods  are  ready  for  the  specified  voyage. 

Enacted  March  21,  1872. 

Insurable  interest  in  profits. 

Sec.  2664.  One  who  has  an  interest  in  the  thing  from  which  profits 
are  expected  to  proceed,  has  an  insurable  interest  in  the  profits. 

Enacted  March  21,  1872. 

Insurable  interest  of  charterer. 

Sec.  2665.  The  charterer  of  a  ship  has  an  insurable  interest  in  it,  to 
the  extent  that  he  is  liable  to  be  damnified  by  its  loss. 

Enacted  March  21,  1872. 

ARTICLE  III. 

CONCEALMENT. 

Sec.  2669.  Information  must  be  communicated. 

2670.  Material  information. 

2671.  Presumption  of  knowledge  of  loss. 

2672.  Concealments  which  only  affect  the  risk  in  question. 

Information  must  be  communicated. 

Sec.  2669.  In  marine  insurance  each  party  is  bound  to  communicate, 
in  addition  to  what  is  required  by  section  2563,  all  the  information  which 
he  possesses,  material  to  the  risk,  except  such  as  is  mentioned  in  section 
2564,  and  to  state  the  exact  and  whole  truth  in  relation  to  all  matters 
that  he  represents,  or  upon  inquiry  assumes  to  disclose. 

Enacted  March  21,  1872. 
Material  information. 

Sec.  2670.  In  marine  insurance,  information  of  the  belief  or  expec- 
tation of  a  third  person,  in  reference  to  a  material  fact,  is  material. 

Enacted  March  21,  1872. 


MARINE    INSURANCE.  75 

Presumption  of  knowledge  of  loss. 

Sec.  2671.  A  person  insured  by  a  contract  of  marine  insurance  is 
presumed  to  have  had  knowledge,  at  the  time  of  insuring,  of  a  prior  loss, 
if  the  information  might  possibly  have  reached  him  in  the  usual  mode  of 
transmission,  and  at  the  usual  rate  of  communication. 

Enacted  March  21,  1872. 
Concealments  which  only  affect  the  risk  in  question. 

Sec.  2672.  A  concealment  in  a  marine  insurance,  in  respect  to  any 
of  the  following  matters,  does  not  vitiate  the  entire  contract,  but  merely 
exonerates  the  insurer  from  a  loss  resulting  from  the  risk  concealed. 

1.  The  national  character  of  the  insured ; 

2.  The  liability  of  the  thing  insured  to  capture  and  detention ; 

3.  The  liability  to  seizure  from  breach  of  foreign  laws  of  trade ; 

4.  The  want  of  necessary  documents ;  and, 

5.  The  use  of  false  and  simulated  papers. 
Enacted  March  21,  1872. 

ARTICLE  IV. 

REPRESENTATIONS. 

Sec.  2676.     Effect  of  intentional  falsity. 
2677.     Representation  of  expectation. 

Effect  of  intentional  falsity. 

Sec.  2676.  If  a  representation,  by  a  person  insured  by  a  contract  of 
marine  insurance,  is  intentionally  false  in  any  respect,  whether  material 
or  immaterial,  the  insurer  may  rescind  the  entire  contract. 

Enacted  March  21,  1872. 

Representation  of  expectation. 

Sec.  2677.  The  eventual  falsity  of  a  representation  as  to  expectation 
does  not,  in  the  absence  of  fraud,  avoid  a  contract  of  insurance. 

Enacted  March  21,  1872. 

ARTICLE  V. 

IMPLIED  WARRANTIES. 

Sec.  2681.  Warranty  of  seaworthiness. 

2682.  Seaworthiness,  what. 

2683.  At  what  time  seaworthiness  must  exist. 

2684.  What  things  are  required  to  constitute  seaworthiness. 

2685.  Different  degrees  of  seaworthiness  at  different  stages  of  the  voyage. 

2686.  Unseaworthiness  during  the  voyage. 

2687.  Seaworthiness  for  purposes  of  insurance  on  cargo. 

2688.  Neutral  papers. 

Warranty  of  seaworthiness. 

Sec.  2681.  In  every  marine  insurance  upon  a  ship  or  freight,  or 
freightage,  or  upon  anything  which  is  the  subject  of  marine  insurance, 
a  warranty  is  implied  that  the  ship  is  seaworthy. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  257. 

Even  if  there  be  no  technical  warranty  of  seaworthiness,  failure  to  provide  the 
vessel  with  ground  tackle  reasonably  fit  to  perform  the  services  and  meet  the  ordinary 
exigencies  of  the  voyage  contemplated,  was  a  breach  of  implied  warranty  of  sea- 
worthiness.    (Pope  vs.  The  Swiss  Lloyd  Ins.  Co.,  4  Fed.  Rep.  153.) 

Seaworthiness,  what. 

Sec.  2682.  A  ship  is  seaworthy,  when  reasonably  fit  to  perform  the 
services,  and  to  encounter  the  ordinary  perils  of  the  voyage,  contem- 
plated by  the  parties  to  the  policy. 

Enacted  March  21,  1872. 


76  INSURANCE  LAWS  OF  CALIFORNIA. 

At  what  time  seaworthiness  must  exist. 

Sec.  2683.  An  implied  warranty  of  seaworthiness  is  complied  with 
if  the  ship  be  seaworthy  at  the  time  of  the  commencement  of  the  risk, 
except  in  the  following  cases : 

1.  When  the  insurance  is  made  for  a  specified  length  of  time,  the 
implied  warranty  is  not  complied  with  unless  the  ship  be  seaworthy  at 
the  commencement  of  every  voyage  she  may  undertake  during  that 
time;  and, 

2.  When  the  insurance  is  upon  the  cargo,  which,  by  the  terms  of  the 
policy,  or  the  description  of  the  voyage,  or  the  established  custom  of 
the  trade,  is  to  be  transshipped  at  an  intermediate  port,  the  implied 
warranty  is  not  complied  with,  unless  each  vessel  upon  which  the  cargo 
is  shipped,  or  transshipped,  be  seaworthy  at  the  commencement  of  its 
particular  voyage. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  257. 
See  note  to  section  2571,  ante. 
What  things  are  required  to  constitute  seaworthiness. 

Sec.  2684.  A  warranty  of  seaworthiness  extends  not  only  to  the 
condition  of  the  structure  of  the  ship  itself,  but  requires  that  it  be 
properly  laden,  and  provided  with  a  competent  master,  a  sufficient 
number  of  competent  officers  and  seamen,  and  the  requisite  appurte- 
nances and  equipments,  such  as  ballast,  cables,  and  anchors,  cordage  and 
sails,  food,  water,  fuel,  and  lights,  and  other  necessary  or  proper  stores 
and  implements  for  the  voyage. 

Enacted  March  21,  1872. 

Different  degrees  of  seaworthiness  at  different  stages  of  the  voyage. 

Sec.  2685.  Where  different  portions  of  the  voyage  contemplated 
by  a  policy  different  in  respect  to  the  things  requisite  to  make  the  ship 
seaworthy  therefor,  a  warranty  of  seaworthiness  is  complied  with  if, 
at  the  commencement  of  each  portion,  the  ship  is  seaworthy  with  refer- 
ence to  that  portion. 

Enacted  March  21,  1872. 

Unseaworthiness  during  voyage. 

Sec.  2686.  When  a  ship  becomes  unseaworthy  during  the  voyage 
to  which  an  insurance  relates,  an  unreasonable  delay  in  repairing 
the  defect  exonerates  the  insurer  from  liability  from  any  loss  arising 
therefrom. 

Enacted  March  21,  1872. 

Seaworthiness  for  purposes  of  insurance  on  cargo. 

Sec.  2687.  A  ship  which  is  seaworthy  for  the  purpose  of  an  insur- 
ance upon  the  ship  may,  nevertheless,  by  reason  of  being  unfitted  to 
receive  the  cargo,  be  unseaworthy  for  the  purpose  of  insurance  upon 
the  cargo. 

Enacted  March  21,  1872. 
Neutral  papers. 

Sec.  2688.  Where  the  nationality  or  neutrality  of  a  ship  or  cargo 
is  expressly  warranted,  it  is  implied  that  the  ship  will  carry  the  requisite 
documents  to  show  such  nationality  or  neutrality,  and  that  it  will  not 
carry  any  documents  which  cast  reasonable  suspicion  thereon. 

Enacted  March  21,  1872. 


MARINE    INSURANCE.  77 

ARTICLE  VI. 

THE  VOYAGE,  AND  DEVIATION. 

Sec.  2692.  Voyage  insured,  how  determined. 

2693.  Course  of  sailing,  how  determined. 

2694.  Deviation,  what. 

2695.  When  proper. 

2696.  When  improper. 

2697.  Deviation  exonerates  the  insurer. 

Voyage  insured,  how  determined. 

Sec.  2692.  When  the  voyage  contemplated  by  a  policy  is  described 
by  the  places  of  beginning  and  ending,  the  voyage  insured  is  one  which 
conforms  to  the  course  of  sailing  fixed  by  mercantile  usage  between 
those  places. 

Enacted  March  21,  1872. 

Course  of  sailing,  how  determined. 

Sec.  2693.  If  the  course  of  sailing  is  not  fixed  by  mercantile  usage, 
the  voyage  insured  by  a  policy  is  the  way  between  the  places  specified 
which,  to  a  master  of  ordinary  skill  and  discretion,  would  seem  the  most 
natural,  direct  and  advantageous. 

Enacted  March  21,  1872. 

Deviation,  what. 

Sec.  2694.  Deviation  is  a  departure  from  the  course  of  the  voyage 
insured,  mentioned  in  the  last  two  sections,  or  an  unreasonable  delay 
in  pursuing  the  voyage,  or  the  commencement  of  an  entirely  different 
voyage. 

Enacted  March  21,  1872. 

When  proper. 

Sec.  2695.     A  deviation  is  proper : 

1.  When  caused  by  circumstances  over  which  neither  the  master  nor 
the  owner  of  the  ship  has  any  control ; 

2.  When  necessary  to  comply  with  a  warranty,  or  to  avoid  a  peril 
whether  insured  .against  or  not ; 

3.  When  made  in  good  faith,  and  upon  reasonable  grounds  of  belief 
in  its  necessity  to  avoid  a  peril ;  or, 

4.  When  made  in  good  faith,  for  the  purpose  of  saving  human  life, 
or  relieving  another  vessel  in  distress. 

Enacted  March  21,  1872. 

When  improper. 

Sec.  2696.  Every  deviation  not  specified  in  the  last  section  is  im- 
proper. 

Enacted  March  21,  1872. 

Deviation  exonerates  the  insurer. 

Sec.  2697.     An  insurer  is  not  liable  for  any  loss  happening  to  a 
thing  insured  subsequently  to  an  improper  deviation. 
Enacted  March  21,  1872. 

Any  voluntary  deviation  is  a  change  of  risk ;  it  forms  a  departure  from  the  con- 
tract, and  an  attempt  to  substitute  another ;  and  the  legal  effect  is  to  discharge  the 
insurer  from  liability  for  any  loss  happening  to  the  thing  insured  subsequently  to 
the  unauthorized  deviation.  The  discharge  of  the  insurer  in  such  cases  depends,  not 
upon  any  supposed  increase  of  risk,  but  wholly  upon  the  departure  of  the  insured 
from  the  contract  of  insurance.     (Schroeder  vs.  Schweitzer  L.  T.  V.  G.,  66  Cal.  294.) 


78  INSURANCE  LAWS  OF  CALIFORNIA. 

ARTICLE  VII. 

LOSS. 

Sec.  2701.  Total  and  partial  loss. 

2702.  Partial  loss. 

2703.  Actual  and  constructive  total  loss. 

2704.  Actual  total  loss,  what. 

2705.  Constructive  total  loss. 
2706. '  Presumed  actual  loss. 

2707.  Insurance  on  cargo,  etc.,  when  voyage  is  broken  up. 

2708.  Cost  of  reshipment,  etc. 

2709.  When  insured  is  entitled  to  payment. 

2711.  Average  loss. 

2712.  Insurance  against  total  loss. 

Total  and  partial  loss. 

Sec.  2701.     A  loss  may  be  either  total  or  partial. 
Enacted  March  21,  1872. 

Partial  loss. 

Sec.  2702.     Every  loss  which  is  not  total  is  partial. 
Enacted  March  21,  1872. 

Actual  and  constructive  total  loss. 

Sec.  2703.     A  total  loss  may  be  either  actual  or  constructive. 
Enacted  March  21,  1872. 

Actual  total  loss.  what. 

Sec.  2704.     An  actual  total  loss  is  caused  by: 

1.  A  total  destruction  of  the  thing  insured; 

2.  The  loss  of  the  thing  by  sinking,  or  by  being  broken  up ; 

3.  Any  damage  to  the  thing  which  renders  it  valueless  to  the  owner 
for  the  purposes  for  which  he  held  it;  or, 

4.  Any  other  event  which  entirely  deprives  the  owner  of  the  posses- 
sion, at  the  port  of  destination,  of  the  thing  insured. 

Enacted  March  21,  1872. 

In  a  suit  brought  on  two  policies  of  insurance  issued  on  two  river  steamboats 
about  to  be  towed  from  Oregon  to  Alaska  but  which  met  with  such  damage  they 
could  not  be  repaired  so  as  to  reach  their  point  of  destination,  the  loss  was  an  "actual, 
total  loss"  under  subdivisions  3  and  4  of  the  above  section.  (Progresso  S.  S.  Co.  vs. 
St.  Paul,  etc.,  Ins.  Co.,  146  Cal.  279,  280.) 

Constructive  total  loss. 

Sec.  2705.  A  constructive  total  loss  is  one  which  gives  to  a  person 
insured  a  right  to  abandon,  under  section  2717. 

Enacted  March  21,  1872. 

Unless  something  remains  of  value  to  pass  to  the  underwriter,  there  is  nothing  to 
abandon,  and  no  case  for  the  operation  of  the  doctrine  of  abandonment.  Where  dam- 
aged cargo  was  sold  after  reaching  port  of  destination  in  satisfaction  of  salvage,  there 
was  no  abandonment  before  the  sale,  and  it  was  held  there  could  be  none  afterwards 
to  create  constructive  total  loss.  (Standard  Marine  Ins.  Co.  vs.  Nome  Beach  L.  & 
T.  Co.,  133  Fed.  Rep.  636.) 

Presumed  total  loss. 

Sec.  2706.  An  actual  loss  may  be  presumed  from  the  continued 
absence  of  a  ship  without  being  heard  of  j  and  the  length  of  time  which 
is  sufficient  to  raise  this  presumption  depends  on  the  circumstances  of 
the  case. 

Enacted  March  21,  1872. 

Insurance  on  cargo,  etc.,  when  voyage  is  broken  up. 

Sec.  2707.  When  a  ship  is  prevented,  at  an  intermediate  port,  from 
completing  the  voyage,  by  the  perils  insured  against,  the  master  must 


MARINE    INSURANCE.  79 

make  every  exertion  to  procure,  in  the  same  or  a  contiguous  port, 
another  ship,  for  the  purpose  of  conveying  the  cargo  to  its  destination ; 
and  the  liability  of  a  marine  insurer  thereon  continues  after  they  are 
thus  reshipped. 

Enacted  March  21,  1872. 

Cost  of  reshipment,  etc. 

Sec.  2708.  In  addition  to  the  liability  mentioned  in  the  last  section 
a  marine  insurer  is  bound  for  damages,  expenses  of  discharging,  storage, 
reshipment,  extra  freightage,  and  all  other  expenses  incurred  in  saving 
cargo  reshipped  pursuant  to  the  last  section,  up  to  the  amount  insured. 

Enacted  March  21,  1872. 

When  insured  is  entitled  to  payment. 

Sec.  2709.  Upon  an  actual  total  loss,  a  person  insured  is  entitled 
to  payment  without  notice  of  abandonment. 

Enacted  March  21,  1872. 

Average  loss. 

Sec.  2711.  Where  it  has  been  agreed  that  an  insurance  upon  a  par- 
ticular thing,  or  a  class  of  things,  shall  be  free  from  particular  average, 
a  marine  insurer  is  not  liable  for  any  particular  average  loss  not 
depriving  the  insured  of  the  possession,  at  the  port  of  destination,  of 
the  whole  of  such  thing,  or  class  of  things,  even  though  it  become 
entirely  worthless;  but  he  isjiable  for  his  proportion  of  all  general 
average  loss  assessed  upon  the  thing  insured. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  259. 
Insurance  against  total  loss. 

Sec.  2712.  An  insurance  confined  in  terms  to  an  actual  total  loss, 
does  not  cover  a  constructive  total  loss,  but  covers  any  loss  which 
necessarily  results  in  depriving  the  insured  of  the  possession,  at  the 
port  of  destination,  of  the  entire  thing  insured. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  259. 

ARTICLE  VIII. 

ABANDONMENT. 

Sec.  2716.  Abandonment,  what. 

2717.  When  insured  may  abandon. 

2718.  Must  be  unqualified. 

2719.  When  may  be  made. 

2720.  Abandonment  may  be  defeated. 

2721.  How  made. 

2722.  Requisites  of  notice. 

2723.  No  other  cause  can  be  relied  on. 

2724.  Effect. 

2725.  Waiver  of  formal  abandonment. 

2726.  Agents  of  the  insured  become  agents  of  the  insurer. 

2727.  Acceptance  not  necessary. 

2728.  Acceptance  conclusive. 

2729.  Accepted  abandonment,  irrevocable. 

2730.  Freightage,  how  affected  by  abandonment  of  ship. 

2731.  Refusal  to  accept. 

2732.  Omission  to  abandon. 

Abandonment,  what. 

Sec.  2716.  Abandonment  is  the  act  by  which,  after  a  constructive 
total  loss,  a  person  insured  by  contract  of  marine  insurance  declares  to 
the  insurer  that  he  relinquishes  to  him  his  interest  in  the  thing  insured. 

Enacted  March  21,  1872. 


80  INSURANCE  LAWS  OF  CALIFORNIA. 

When  insured  may  abandon. 

Sec.  2717.  A  person  insured  by  a  contract  of  marine  insurance  may- 
abandon  the  thing  insured,  or  any  particular  portion  thereof  separately 
valued  by  the  policy,  or  otherwise  separately  insured,  and  recover  for  a 
total  loss  thereof,  when  the  cause  of  the  loss  is  a  peril  insured  against : 

1.  If  more  than  half  thereof  in  value  is  actually  lost,  or  would  have 
to  be  expended  to  recover  it  from  the  peril ; 

2.  If  it  is  injured  to  such  an  extent  as  to  reduce  its  value  more  than 
one  half; 

3.  If  the  thing  insured,  being  a  ship,  the  contemplated  voyage  cannot 
be  lawfully  performed  without  incurring  an  expense  to  the  insured  of 
more  than  half  the  value  of  the  thing  abandoned,  or  without  incurring 
a  risk  which  a  prudent  man  would  not  take  under  the  circumstances ;  or, 

4.  If  the  thing  insured,  being  cargo  or  freightage,  the  voyage  cannot 
be  performed  nor  another  ship  procured  by  the  master,  within  a  reason- 
able time  and  with  reasonable  diligence,  to  forward  the  cargo,  without 
incurring  the  like  expense  or  risk.  But  freightage  cannot  in  any  case 
be  abandoned,  unless  the  ship  is  also  abandoned. 

Enacted  March  21,  1872. 

In  a  case  where  the  insurance  policies  contained  the  provision  that  the  vessels 
insured  were  "warranted  free  from  all  average  and  salvage,"  it  was  claimed  that  this 
limited  the  right  of  recovery  to  an  "actual,  total  loss"  only,  and  excluded  the  "right 
to  abandon"  for  "constructive  total  loss,"  but  the  question  became  immaterial  as  the 
loss  was  found  to  be  an  actual  total  loss.  (Progresso  S.  S.  Co.  vs.  St.  Paul,  etc., 
Ins.  Co.,  146  Cal.  279,  280.)  « 

Must  be  unqualified. 

Sec.  2718.     An  abandonment  must  be  neither  partial  nor  conditional. 

Enacted  March  21,  1872. 

When  may  be  made. 

Sec.  2719.  An  abandonment  must  be  made  within  a  reasonable  time 
after  the  information  of  the  loss,  and  after  the  commencement  of  the 
voyage,  and  before  the  party  abandoning  has  information  of  its  com- 
pletion. 

Enacted  March  21,  1872. 

Abandonment  may  be  defeated. 

Sec.  2720.  Where  the  information  upon  which  an  abandonment  has 
been  made  proves  incorrect,  or  the  thing  insured  was  so  far  restored 
when  the  abandonment  was  made  that  there  was  then  in  fact  no  total 
loss,  the  abandonment  becomes  ineffectual. 

Enacted  March  21,  1872. 

How  made. 

Sec.  2721.  Abandonment  is  made  by  giving  notice  thereof  to  the 
insurer,  which  may  be  done  orally,  or  in  writing. 

Enacted  March  21,  1872. 

Requisites  of  notice. 

Sec.  2722.  A  notice  of  abandonment  must  be  explicit,  and  must 
specify  the  particular  cause  of  the  abandonment,  but  need  state  only 
enough  to  show  that  there  is  probable  cause  therefor,  and  need  not  be 
accompanied  with  proof  of  interest  or  of  loss. 

Enacted  March  21,  1872. 


MARINE   INSURANCE.  81 

No  other  cause  can  be  relied  on. 

Sec.  2723.  An  abandonment  can  be  sustained  only  upon  the  cause 
specified  in  the  notice  thereof. 

Enacted  March  21,  1872. 

Effect. 

Sec.  2724.  An  abandonment  is  equivalent  to  a  transfer,  by  the 
insured,  of  his  interest,  to  the  insurer,  with  all  the  chances  of  recovery 
and  indemnity. 

Enacted  March  21,  1872. 

Waiver  of  formal  abandonment. 

Sec.  2725.  If  a  marine  insurer  pays  for  a  loss  as  if  it  were  an 
actual  total  loss,  he  is  entitled  to  whatever  may  remain  of  the  thing 
insured,  or  its  proceeds  or  salvage,  as  if  there  had  been  a  formal 
abandonment. 

Enacted  March  21,  1872. 

Agents  of  the  insured  become  agents  of  the  insurer. 

Sec.  2726.  Upon  an  abandonment,  acts  d©ne  in  good  faith  by  those 
who  were  agents  of  the  insured  in  respect  to  the  thing  insured,  subse- 
quent to  the  loss,  are  at  the  risk  of  the  insurer,  and  for  his  benefit. 

Enacted  March  21,  1872. 

Acceptance  not  necessary. 

Sec.  2727.  An  acceptance  of  an  abandonment  is  not  necessary  to  the 
rights  of  the  insured,  and  is  not  to  be  presumed  from  the  mere  silence 
of  the  insurer,  upon  his  receiving  notice  of  abandonment. 

Enacted  March  21,  1872. 
Acceptance  conclusive. 

Sec.  2728.  The  acceptance  of  an  abandonment,  whether  express  or 
implied,  is  conclusive  upon  the  parties,  and  admits  the  loss  and  the  suffi- 
ciency of  the  abandonment. 

Enacted  March  21,  1872. 

Accepted  abandonment,  irrevocable. 

Sec.  2729.  An  abandonment  once  made  and  accepted  is  irrevocable, 
unless  the  ground  upon  which  it  was  made  proves  to  be  unfounded. 

Enacted  March  21,  1872. 
Freightage,  how  affected  by  abandonment  of  ship. 

Sec.  2730.  On  an  accepted  abandonment  of  a  ship,  freightage  earned 
previous  to  the  loss  belongs  to  the  insurer  thereof;  but  freightage  sub- 
sequently earned  belongs  to  the  insurer  of  the  ship. 

Enacted  March  21,  1872. 
Refusal  to  accept. 

Sec.  2731.  If  an  insurer  refuses  to  accept  a  valid  abandonment,  he 
is  liable  as  upon  an  actual  total  loss,  deducting  from  the  amount  any 
proceeds  of  the  thing  insured  which  may  have  come  to  the  hands  of  the 
insured. 

Enacted  March  21,  1872. 
Omission  to  abandon. 

Sec.  2732.  If  a  person  insured  omits  to  abandon,  he  may  neverthe- 
less recover  his  actual  loss. 

Enacted  March  21,  1872. 
6— IN 


82  INSURANCE  LAWS  OP  CALIFORNIA. 

ARTICLE  IX. 

MEASURE  OF  INDEMNITY. 

Sec.  2736.  Valuation,  when  conclusive. 

2737.  Partial  loss. 

2738.  Profits. 

2739.  Valuation  apportioned. 

2740.  Valuation  applied  to  profits. 

2741.  Estimating  loss  under  open  policy. 

2742.  Arrival  of  thing  damaged. 

2743.  Labor  and  expenses. 

2744.  General  average. 

2745.  Contribution. 

2746.  One  third  new  for  old. 

Valuation,  when  conclusive. 

Sec.  2736.  A  valuation  in  a  policy  of  marine  insurance  is  conclusive 
between  the  parties  thereto  in  the  adjustment  of  either  a  partial  or  total 
loss,  if  the  insured  has  some  interest  at  risk,  and  there  is  no  fraud  on 
his  part ;  except  that  when  a  thing  has  been  hypothecated  by  bottomry 
or  respondentia,  before  its  insurance,  and  without  the  knowledge  of  the 
person  actually  procuring  the  insurance,  he  may  show  the  real  value. 
But  a  valuation  fraudulent  in  fact  entitles  the  insurer  to  rescind  the 
contract. 

Enacted  March  21,  1872. 

See  note  to  section  2705,  ante. 
Partial  loss. 

Sec.  2737.  A  marine  insurer  is  liable  upon  a  partial  loss,  only  for 
such  proportion  of  the  amount  insured  by  him  as  the  loss  bears  to  the 
value  of  the  whole  interest  of  the  insured  in  the  property  insured. 

Enacted  March  21,  1872. 

Profits. 

Sec.  2738.  Where  profits  are  separately  insured  in  a  contract  of 
marine  insurance,  the  insured  is  entitled  to  recover,  in  case  of  loss,  a 
proportion  of  such  profits  equivalent  to  the  proportion  which  the  value 
of  the  property  lost  bears  to  the  value  of  the  whole. 

Enacted  March  21,  1872. 

Valuation  apportioned. 

Sec.  2739.  In  case  of  a  valued  policy  of  marine  insurance  on 
freightage  or  cargo,  if  a  part  only  of  the  subject  is  exposed  to  risk,  the 
valuation  applies  only  in  proportion  to  such  part. 

Enacted  March  21,  1872. 

Valuation  applied  to  profits. 

Sec.  2740.  When  profits  are  valued  and  insured  by  a  contract  of 
marine  insurance,  a  loss  of  them  is  conclusively  presumed  from  a  loss  of 
the  property  out  of  which  they  were  expected  to  arise,  and  the  valuation 
fixes  their  amount. 

Enacted  March  21,  1872. 

Estimating  loss  under  an  open  policy. 

Sec.  2741.  In  estimating  a  loss  under  an  open  policy  of  marine  in- 
surance the  following  rules  are  to  be  observed : 

1.  The  value  of  a  ship  is  its  value  at  the  beginning  of  the  risk  includ- 
ing all  articles  or  charges  which  add  to  its  permanent  value,  or  which 
are  necessary  to  prepare  it  for  the  voyage  insured ; 


MARINE   INSURANCE.  83 

2.  The  value  of  cargo  is  its  actual  cost  to  the  insured,  when  laden  on 
board,  or  where  that  cost  cannot  be  ascertained,  its  market  value  at  the 
time  and  place  of  lading,  adding  the  charges  incurred  in  purchasing 
and  placing  it  on  board,  but  without  reference  to  any  losses  incurred 
in  raising  money  for  its  purchase,  or  to  any  drawback  on  its  exporta- 
tion, or  to  the  fluctuations  of  the  market  at  the  port  of  destination,  or 
to  expenses  incurred  on  the  way  or  on  arrival ; 

3.  The  value  of  freightage  is  the  gross  freightage,  exclusive  of  pri- 
mage, without  reference  to  the  cost  of  earning  it ;  and, 

4.  The  cost  of  insurance  is  in  each  case  to  be  added  to  the  value  thus 
estimated. 

Enacted  March  21,  1872. 

Arrival  of  things  damaged. 

Sec.  2742.  If  cargo  insured  against  partial  loss  arrives  at  the  port 
of  destination  in  a  damaged  condition,  the  loss  of  the  insured  is  deemed 
to  be  the  same  proportion  of  the  value  which  the  market  price  at  that 
port,  of  the  thing  so  damaged,  bears  to  the  market  price  it  would  have 
brought  if  sound. 

Enacted  March  21,  1872. 

Labor  and  expenses. 

Sec.  2743.  A  marine  insurer  is  liable  for  all  the  expense  attendant 
upon  a  loss  which  forces  the  ship  into  port  to  be  repaired;  and  where 
it  is  agreed  that  the  insured  may  labor  for  the  recovery  of  the  property, 
the  insurer  is  liable  for  the  expense  incurred  thereby,  such  expense,  in 
either  case,  being  in  addition  to  a  total  loss,  if  that  afterwards  occurs. 

Enacted  March  21,  1872. 

General  average. 

Sec.  2744.  A  marine  insurer  is  liable  for  a  loss  falling  upon  the 
insured,  through  a  contribution  in  respect  to  the  thing  insured,  required 
to  be  made  by  him  towards  a  general  average  loss  called  for  by  a  peril 
insured  against. 

Enacted  March  21,  1872. 

Contribution. 

Sec.  2745.  "Where  a  person  insured  by  a  contract  of  marine  insur- 
ance has  a  demand  against  others  for  contribution,  he  may  claim  the 
whole  loss  from  the  insurer,  subrogating  him  to  his  own  right  to  con- 
tribution. But  no  such  claim  can  be  made  upon  the  insurer  after  the 
separation  of  the  interests  liable  to  contribution,  nor  when  the  insured, 
having  the  right  and  opportunity  to  enforce  contribution  from  others, 
has  neglected  or  waived  the  exercise  of  that  right. 

Enacted  March  21,  1872.    Amended,  Stats.  1873-4,  p.  259. 

One  third  new  for  old. 

Sec.  2746.  In  the  case  of  a  partial  loss  of  a  ship  or  its  equipments, 
the  old  materials  are  to  be  applied  toward  payment  for  the  new,  and 
whether  the  ship  is  new  or  old,  a  marine  insurer  is  liable  for  only  two 
thirds  of  the  remaining  cost  of  the  repairs,  except  that  he  must  pay  for 
anchors  and  cannon  in  full,  and  for  sheathing-metal  at  a  depreciation 
of  only  two  and  one  half  per  cent  for  each  month  that  it  has  been 
fastened  to  the  ship. 

Enacted  March  21,  1872. 


84  INSURANCE  LAWS  OF  CALIFORNIA. 

CHAPTER  III. 

FIRE  INSURANCE. 

Sec.  2753.  Alteration  increasing  risk. 

2754.  Alteration  not  increasing  risk. 

2755.  Acts  of  the  insured. 

2756.  Measure  of  indemnity. 

2757.  Value  of  interest  in  policy  of  insurance.     How  may  be  fixed.     Total 

or  partial  loss. 

Alteration  increasing  risk. 

Sec.  2753.  An  alteration  in  the  use  or  condition  of  a  thing  insured 
from  that  to  which  it  is  limited  by  the  policy  made  without  the  consent 
of  the  insurer,  by  means  within  the  control  of  the  insured,  and  increas- 
ing the  risk,  entitles  an  insurer  to  rescind  a  contract  of  fire  insurance. 

Enacted  March  21,  1872. 

Alteration  not  increasing  risk. 

Sec.  2754.  An  alteration  in  the  use  or  condition  of  a  thing  insured 
from  that  to  which  it  is  limited  by  the  policy,  which  does  not  increase 
the  risk,  does  not  affect  a  contract  of  fire  insurance. 

Enacted  March  21,  1872. 

Where  policy  of  insurance  was  issued  on  combined  harvester  while  in  use,  and  it 
was  destroyed  by  fire  while  housed  in  a  shed,  the  alteration  in  the  risk  was  held  to 
be  fatal  to  a  recovery  of  the  insurance  money.  (Slinkard  vs.  Manchester,  etc.,  Co., 
122  Cal.  595.) 

Acts  of  the  insured. 

Sec.  2755.  A  contract  of  fire  insurance  is  not  affected  by  any  act 
of  the  insured  subsequent  to  the  execution  of  the  policy,  which  does  not 
violate  its  provisions,  even  though  it  increases  the  risk  and  is  the  cause 
of  a  loss. 

Enacted  March  21,  1872. 
Measure  of  indemnity. 

Sec.  2756.  If  there  is  no  valuation  in  the  policy,  the  measure  of 
indemnity  in  an  insurance  against  fire  is  the  expense  it  would  be  to  the 
insured  at  the  time  of  the  commencement  of  the  fire  to  replace  the  thing 
lost  or  injured  in  the  condition  in  which  it  was  at  the  time  of  the  injury ; 
but  the  effect  of  a  valuation  in  a  policy  of  fire  insurance  is  the  same  as 
in  a  policy  of  marine  insurance. 

Enacted  March  21,  1872. 

Value  of  interest  in  policy  of  insurance;  how  may  be  fixed;  total  or  partial 
loss. 

Sec.  2757.  Whenever  the  insured  desires  to  have  a  valuation  named 
in  his  policy,  insuring  any  building  or  structure  against  fire,  he  may 
require  such  building  or  structure  to  be  examined  by  the  insurer  and 
the  value  of  the  insured's  interest  therein  shall  be  thereupon  fixed  by 
the  parties.  The  cost  of  such  examination  shall  be  paid  for  by  the 
insured.  A  clause  shall  be  inserted  in  such  policy  stating  substantially 
that  the  value  of  the  insured's  interest  in  such  building  or  structure 
has  been  thus  fixed.  In  the  absence  of  any  change  increasing  the  risk 
without  the  consent  of  the  insurer  or  of  fraud  on  the  part  of  the  insured, 
then  in  case  of  a  total  loss  under  such  policy,  the  whole  amount  so 
insured  upon  the  insured's  interest  in  such  building  or  structure,  as 
stated  in  the  policy  upon  which  the  insurers  have  received  a  premium, 
shall  be  paid,  and  in  case  of  a  partial  loss  the  full  amount  of  the  partial 
loss  shall  be  so  paid,  and  in  case  there  are  two  or  more  policies  covering 
the  insured's  interest  therein,  each  policy  shall  contribute  pro  rata  to 


LIFE   AND   HEALTH    INSURANCE.  85 

the  payment  of  such  whole  or  partial  loss.  But  in  no  case  shall  the 
insurer  be  required  to  pay  more  than  the  amount  thus  stated  in  such 
policy.  This  section  shall  not  prevent  the  parties  from  stipulating  in 
such  policies  concerning  the  repairing,  rebuilding  or  replacing  build- 
ings or  structures  wholly  or  partially  damaged  or  destroyed. 
Enacted  March  21,  1872. 

CHAPTER  IV. 

LIFE  AND  HEALTH  INSURANCE. 

Sec.  2762.  Insurance  upon  life,  when  payable. 

2763.  Insurable  interest. 

2764.  Assignee,  etc.,  of  life  policy  need  have  no  interest. 

2765.  Notice  of  transfer. 

2766.  Measure  of  indemnity. 

Insurance  upon  life,  when  payable. 

Sec.  2762.  An  insurance  upon  life  may  be  made  payable  on  the 
death  of  the  person,  or  on  his  surviving  a  specified  period,  or  periodically 
so  long  as  he  shall  live,  or  otherwise  contingently  on  the  continuance  or 
determination  of  life. 

Enacted  March  21,  1872. 

Insurable  interest. 

Sec.  2763.  Every  person  has  an  insurable  interest  in  the  life  and 
health : 

1.  Of  himself; 

2.  Of  any  person  on  whom  he  depends  wholly  or  in  part  for  educa- 
tion or  support; 

3.  Of  any  person  under  a  legal  obligation  to  him  for  the  payment  of 
money,  or  respecting  property  or  services,  of  which  death  or  illness 
might  delay  or  prevent  the  performance ;  and, 

4.  Of  any  person  upon  whose  life  any  estate  or  interest  vested  in  him 
depends. 

Enacted  March  21,  1872. 

An  assignee  of  a  policy  of  insurance,  as  security  for  an  indebtedness,  may  main- 
tain an  action  for  the  assured.  The  company  has  no  concern  with  the  application 
thereof  after  recovering.     (Curtiss  vs.  JEtna  L.  Ins.  Co.,  90  Cal.  245.) 

Assignee,  etc.,  of  life  policy  need  have  no  interest. 

Sec.  2764.  A  policy  of  insurance  upon  life  or  health  may  pass  by 
transfer,  will,  or  succession  to  any  person,  whether  he  has  an  insurable 
interest  or  not,  and  such  person  may  recover  upon  it  whatever  the  in- 
sured might  have  recovered. 

Enacted  March  21,  1872. 

Curtiss  vs.  /Etna  L.  Ins.  Co.,  90  Cal.  245,  248. 
See  note  to  section  2763,  ante. 

Notice  of  transfer. 

Sec.  2765.  Notice  to  an  insurer  of  a  transfer  or  bequest  thereof  is 
not  necessary  to  preserve  the  validity  of  a  policy  of  insurance  upon  life 
or  health,  unless  thereby  expressly  required. 

Enacted  March  21,  1872. 

Measure  of  indemnity. 

Sec.  2766.  Unless  the  interest  of  a  person  insured  is  susceptible  of 
exact  pecuniary  measurement,  the  measure  of  indemnity  under  a  policy 
of  insurance  upon  life  or  health  is  the  sum  fixed  in  the  policy. 

Enacted  March  21, 1872. 


86  INSURANCE  LAWS  OF  CALIFORNIA. 


CODE  OF  CIVIL  PROCEDURE. 


PART  II.     TITLE  III. 

PARTIES  TO  CIVIL  ACTIONS. 

Plaintiff  may  sue  in  one  action  the  different  parties  to  commercial  paper  or 
insurance  policies. 

Sec.  383.  Persons  severally  liable  upon  the  same  obligation  or  instru- 
ment, including  the  parties  to  bills  of  exchange  and  promissory  notes, 
and  sureties  on  the  same  or  separate  instruments,  may  all  or  any  of  them 
be  included  in  the  same  action,  at  the  option  of  the  plaintiff ;  and  all  or 
any  of  them  join  as  plaintiffs  in  the  same  action,  concerning  or  affect- 
ing the  obligation  or  instrument  upon  which  they  are  severally  liable. 
Where  the  same  person  is  insured  by  two  or  more  insurers  separately  in 
respect  to  the  same  subject  and  interest,  such  person,  or  the  payee  under 
the  policies,  or  the  assignee  of  the  cause  of  action,  or  other  successor  in 
interest  of  such  assured  or  payee,  may  join  all  or  any  of  such  insurers  in 
a  single  action  for  the  recovery  of  a  loss  under  the  several  policies,  and 
in  case  of  judgment  a  several  judgment  must  be  rendered  against  each 
of  such  insurers  according  as  his  liability  shall  appear. 

Enacted  March  11,  1872.    Amended,  Stats.  1897,  p.  19;  1903,  p.  203. 


PART  II.     TITLE  VI.     CHAPTER  IV. 

PLEADINGS  IN  CIVIL  ACTIONS. 

Actions  to  recover  insurance — what  defendant  claiming  exemption  must  set  up. 

Sec.  437a.  In  an  action  to  recover  upon  a  contract  of  insurance 
wherein  the  defendant  claims  exemption  from  liability  upon  the  ground 
that,  although  the  proximate  cause  of  the  loss  was  a  peril  insured  against, 
the  loss  was  remotely  caused  by  or  would  not  have  occurred  but  for  a 
peril  excepted  in  the  contract  of  insurance,  the  defendant  shall  in  his 
answer  set  forth  andr  specif y  the  peril  which  was  the  proximate  cause  of 
the  loss,  in  what  manner  the  peril  excepted  contributed  to  the  loss  or 
itself  caused  the  peril  insured  against,  and  if  he  claim  that  the  peril 
excepted  caused  the  peril  insured  against,  he  shall  in  his  answer  set  forth 
and  specify  upon  what  premises  or  at  what  place  the  peril  excepted 
caused  the  peril  insured  against. 

Enacted,  Stats.  1907,  p.  836. 

This  section  was  declared  unconstitutional  in  an  action  on  a  fire  insurance  policy 
upon  property  in  the  city  and  county  of  San  Francisco,  which,  among  other  exemp- 
tions, provided  "This  company  shall  not  be  liable  for  loss  caused  directly  or  indi- 
rectly by  earthquake,"  as  depriving  defendant  of  the  equal  protection  of  the  law, 
in  that  it  discriminates  against  a  particular  class  of  actions  and  against  'defendants 
generally  without  apparent  reason  for  the  distinction;  and  was  also  held  invalid  as 
violating  the  constitution  of  California/article  4,  section  25,  subdivision  3,  prohibit- 
ing special  laws  regulating  the  practice  of  courts.  (Board  of  Education  vs.  Alliance 
Assvr.  Co.  (0, C),  159  Fed,  Rep,  994.)       . 


SURETY    CORPORATION.  87 

PART  II.     TITLE  XIV.     CHAPTER  VII. 

SURETY  CORPORATIONS. 

Corporations  may  become  sureties  on  undertakings  and  bonds. 

Sec.  1056.  In  all  cases  where  an  undertaking  or  bond,  with  any  num- 
ber of  sureties  is  authorized  or  required  by  any  provision  of  this  code, 
or  of  any  law  of  this  state,  any  corporation  with  a  paid-up  capital  of  not 
less  than  one  hundred  thousand  dollars,  incorporated  under  the  laws  of 
this  or  any  other  state  of  the  United  States  for  the  purpose  of  making, 
guaranteeing,  or  becoming  a  surety  upon  bonds  or  undertakings  required 
or  authorized  by  law,  or  which,  by  the  laws  of  the  state  where  it  was 
originally  incorporated  has  such  power,  and  which  shall  have  complied 
with  all  the  requirements  of  the  law  of  this  state  regulating  the  forma- 
tion or  admission  of  these  corporations  to  transact  such  business  in  this 
state,  may  become  and  shall  be  accepted  as  security  or  as  sole  and  suffi- 
cient surety  upon  such  undertaking  or  bond,  and  such  corporate  surety 
shall  be  subject  to  all  the  liabilities  and  entitled  to  all  the  rights  of 
natural  persons'  sureties;  provided,  that  the  insurance  commissioner 
shall  have  the  same  jurisdiction  and  powers  to  examine  the  affairs  of 
such  corporations  as  he  has  in  other  cases ;  shall  require  them  to  file  sim- 
ilar statements  and  issue  to  them  a  similar  certificate.  And  whenever 
the  liabilities  of  any  such  corporation  shall  exceed  its  assets,  the  insur- 
ance commissioner  shall  require  the  deficiency  to  be  paid  up  in  sixty 
days,  and  if  it  is  not  so  paid  up,  then  he  shall  issue  a  certificate  showing 
the  extent  of  such  deficiency,  and  he  shall  publish  the  same  once  a  week 
for  three  weeks,  in  a  daily  San  Francisco  paper.  And,  until  such  defi- 
ciency is  paid  up,  such  company  shall  not  do  business  in  this  state.  In 
estimating  the  condition  of  any  such  company,  the  commissioner  shall 
allow  as  assets  only  such  as  are  allowed  under  existing  laws  at  the 
time,  and  shall  charge  as  liabilities,  in  addition  of  eighty  per  cent  of  the 
capital  stock,  all  outstanding  indebtedness  of  the  company,  and  a  pre- 
mium reserve  equal  to  fifty  per  centum  of  the  premiums  charged  by 
said  company  on  all  risks  then  in  force. 

Enacted  March  11,  1872.  Repealed,  Stats.  1880,  p.  111.  Enacted, 
Stats.  1889,  p.  215. 

Undertakings  mentioned  in  this  code,  requisites  of. 

Sec.  1057.  In  any  case  where  an  undertaking  or  bond  is  authorized 
or  required  by  any  law  of  this  state,  the  officer  taking  the  same  must, 
except  in  the  case  of  such  a  corporation  as  is  mentioned  in  the  next  pre- 
ceding section,  require  the  sureties  to  accompany  it  with  an  affidavit  that 
they  are  each  residents  and  householders,  or  freeholders,  within  the  state, 
and  are  each  worth  the  sum  specified  in  the  undertaking  or  bond,  over 
and  above  all  their  just  debts  and  liabilities,  exclusive  of  property  ex- 
empt from  execution ;  but  when  the  amount  specified  in  the  undertaking 
or  bond  exceeds  three  thousand  dollars,  and  there  are  more  than  two 
sureties  thereon,  they  may  state  in  their  affidavits  that  they  are  severally 
worth  amounts  less  than  the  amount  specified  in  the  undertaking  or  bond, 
if  the  whole  amount  is  equivalent  to  that  of  two  sufficient  sureties.  Any 
corporation  such  as  is  mentioned  in  the  next  preceding  section  may  be- 
come sole  surety  on  such  bond.  No  such  corporation  must  be  accepted 
in  any  case  as  a  surety  when  its  liabilities  exceed  its  assets  as  ascertained 


88  INSUKANCE  LAWS  OF  CALIFORNIA. 

in  the  manner  provided  in  section  1056.  Whenever  an  undertaking  has 
been  given  and  approved  in  any  action  or  proceeding,  and  it  is  there- 
after made  to  appear  to  the  satisfaction  of  the  court  that  any  surety 
upon  such  undertaking  has  for  any  reason  become  insufficient,  the  court 
may,  upon  notice,  order  the  giving  of  a  new  undertaking,  with  sufficient 
sureties,  in  lieu  of  such  insufficient  undertaking.  In  case  such  new 
undertaking  so  required  shall  not  be  given  within  the  time  required  by 
such  order,  or  in  case  the  sureties  thereon  fail  to  justify  thereon  when 
required,  all  rights  obtained  by  the  filing  of  such  original  undertaking 
shall  immediately  cease. 

Enacted  March  11,  1872.  Amended,  Stats.  1889,  p.  216;  Stats. 
1907,  p.  308. 

On  a  motion  to  dismiss  an  appeal,  the  two  foregoing  sections  were  considered  by 
Department  Two  of  the  supreme  court  of  this  state,  and  the  following  decision  was 
rendered,  viz. : 

DE  HAVEN,  J. — The  undertaking  on  appeal  herein  was  executed  by  the  Ameri- 
can Surety  Company,  a  foreign  corporation,  and  the  respondent  moves  to  dismiss  the 
appeal,  upon  the  ground  that  the  undertaking  is  not  properly  signed,  and  upon  the 
further  ground  that  the  corporation  has  not  filed  with  the  secretary  of  state  a  desig- 
nation of  some  person  residing  in  this  state  upon  whom  service  of  summons  may  be 
made  as  required  by  the  act  relating  to  foreign  corporations,  approved  April  1,  1872. 
(Stats.  1871-2,  p.  826.) 

1.  The  undertaking  is  signed  in  behalf  of  the  corporation  surety  by  its  second 
vice-president  and  its  assistant  secretary,  and  has  affixed  to  it  the  seal  of  the  corpo- 
ration. There  is  nothing  before  us  to  show  that  these  officers  were  not  authorized  to 
sign  and  deliver  the  undertaking,  and  we  can  not,  therefore,  hold  that  the  under- 
taking is  void  because  not  properly  signed. 

2.  The  corporation  has  never  filed  with  the  secretary  of  state  a  paper  designating 
the  person  upon  whom  service  of  process  can  be  made  for  it  in  this  state,  as  required 
by  the  act  of  the  legislature  above  referred  to;  but  it  appears  from  the  certificate  of 
the  insurance  commissioner  for  this  state  that  "The  American  Surety  Company  of 
New  York  City,  New  York,  is  duly  authorized  to  transact  business  in  this  state,  and 
has  been  so  authorized  since  December  5,  1884."  It  is  provided  by  section  1056  of 
the  Code  of  Civil  Procedure  that  in  respect  to  corporations  organized  for  the  purpose 
of  becoming  surety  on  bonds  or  undertakings  authorized  by  law,  "the  insurance  com- 
missioner shall  have  the  same  jurisdiction  and  powers  to  examine  the  affairs  of  such 
corporations  as  he  has  in  other  cases ;  ( and )  shall  require  them  to  file  similar  state- 
ments, and  issue  to  them  a  similar  certificate." 

The  certificate  referred  to  in  this  section  is  one  by  which  the  corporation  is  author- 
ized to  transact  business  in  this  state,  and  the  insurance  commissioner  is  not  author- 
ized to  issue  such  a  certificate  to  a  foreign  insurance  company  until  it  has  first  filed 
in  his  office  "the  name  of  an  agent  and  his  place  of  residence  in  this  state,  on  whom 
summons  and  other  process  may  be  served  in  all  actions  or  other  legal  proceedings 
against  such  corporation  or  company."  (Pol.  Code,  section  616.)  We  think  that 
under  section  1056  of  the  Code  of  Civil  Procedure  this  provision  of  section  616  of 
the  Political  Code  also  applies  to  corporations  like  that  executing  the  undertaking  on 
appeal  in  this  case,  and  that  when  such  a  corporation  has  filed  with  the  insurance 
commissioner  the  designation  required  by  this  section  of  the  Political  Code,  that  is 
all  that  is  required  of  it  in  the  matter  of  naming  an  agent  upon  whom  process  in 
actions  against  it  may  be  served,  to  entitle  it  to  transact  business  in  this  state, 
although  the  failure  to  file  such  designation  with  the  secretary  of  state  might  deprive 
it  of  the  benefit  of  "the  statutes  of  this  state  limiting  the  time  for  the  commence- 
ment of  actions,"  as  provided  by  the  second  section  of  the  above  mentioned  act  of 
April  1,  1872. 

The  certificate  of  the  insurance  commissioner,  filed  by  the  appellant  herein,  while 
it  does  not  expressly  state  that  the  American  Surety  Company  has  complied  with 
section  616  of  the  Political  Code,  is  at  least  prima  facie  evidence  that  it  has  done  so. 
There  is  a  presumption  that  the  insurance  commissioner  properly  performed  his  official 
duty  in  issuing  this  certificate,  and  in  the  absence  of  any  evidence  showing  that  this 
certificate  was  issued  under  circumstances  not  authorized  by  law,  the  certificate  will 
be  regarded  as  sufficient  proof  that  it  was  properly  issued,  and  that  as  stated  above, 
the  American  Surety  Company  had  and  has  authority  to  transact  business  in  this 
state.  If,  in  fact,  that  corporation  has  not  complied  with  the  section  of  the  Political 
Code  above  referred  to,  the  respondent  will  be  permitted  to  renew  his  motion,  and 
show  that  the  certificate  was  improperly  issued,  but  upon  the  facts  now  before  us, 
the  motion  to  dismiss  the  appeal  must  be  denied. 

Motion  denied. 

Gutseil  vs.  Pennie,  95  Cal.  598. 


SURETY  CORPORATION.  89 

A  corporation  of  the  character  defined  by  section  1056  and  1057  of  the  Code  of 
Civil  Procedure  as  enacted  in  1889,  need  not  be  accepted  as  sole  and  sufficient  surety 
upon  any  undertaking  no  matter  what  the  disparity  between  its  amount  and  the 
amount  of  the  corporate  assets,  but  may  be  required,  upon  exception  to  its  sufficiency 
as  surety  under  section  948  of  the  Code  of  Civil  Procedure,  to  show  surplus  assets 
equal  to  the  amount  of  its  undertaking. 

Fox  vs.  The  Hale  and  Norcross  8.  M.  Co.,  97  Cal.  353. 

How  corporate  sureties  shall  justify. 

Sec.  1057a.  Whenever  the  surety  on  a  bond  or  undertaking  author- 
ized or  required  by  any  law  of  this  state  is  a  corporation  of  the  state  or 
a  foreign  corporation,  authorized  to  become  surety  on  bonds  or  under- 
takings in  the  state,  and  exception  is  taken  to  the  sufficiency  of  such 
surety  as  required  by  law,  such  corporate  surety  may  justify  on  such 
bond  or  undertaking  as  follows :  Any  agent,  attorney  in  fact,  or  officer 
of  such  corporation  shall  submit  to  the  court,  judge,  officer,  board  or 
other  person  before  whom  the  justification  is  to  be  made: 

First — The  original,  or  a  certified  copy  of,  the  power  of  attorney,  by- 
laws or  other  instrument  showing  the  authority  of  the  person  or  persons 
who  executed  the  bond  or  undertaking  to  execute  the  same ; 

Second — A  certified  copy  of  the  certificate  of  authority  issued  by  the 
insurance  commissioner  as  required  by  section  596  of  the  Political  Code, 
showing  that  the  corporation  is  authorized  to  transact  business ; 

Third — A  certificate  from  the  county  clerk  of  the  county  or  city  and 
county  in  which  the  bond  or  undertaking  is  filed,  showing  that  the  said 
certificate  of  authority  has  not  been  surrendered,  revoked,  canceled, 
annulled  or  suspended,  or  in  the  event  that  it  has  been,  that  renewed 
authority  to  act  under  such  certificate  has  been  granted,  as  provided  for 
in  section  625a  of  the  Political  Code ; 

Fourth — A  financial  statement  showing  the  assets  and  liabilities  of 
such  corporation  at  the  end  of  the  quarter  calendar  year  next  preceding 
the  date  of  the  execution  of  the  bond  or  undertaking;  such  financial 
statement  must  be  verified  under  oath  by  the  president,  or  a  vice-presi- 
dent and  attested  by  the  secretary  or  an  assistant  secretary  of  such  cor- 
poration. 

Upon  complying  with  the  foregoing  provisions  and  it  appearing  that 
the  bond  or  undertaking  was  duly  executed,  that  the  corporation  is 
authorized  to  transact  business  in  the  state,  and  that  its  assets  exceed  its 
liabilities  in  an  amount  equal  to  or  in  excess  of  the  amount  of  the  bond 
or  undertaking,  the  justification  of  the  surety  shall  be  complete  and  it 
shall  be  accepted  as  the  sole  and  sufficient  surety  on  the  bond  or  under- 
taking. The  county  clerk  of  any  county  or  city  and  county  shall  upon 
request,  issue  the  certificate  hereinbefore  provided  for,  which  certificate 
shall  state  whether  or  not  the  certificate  of  authority  of  such  corporation 
has  been  surrendered,  revoked,  canceled,  annulled  or  suspended,  and  in 
the  event  that  it  has,  whether  or  not  renewed  authority  to  act  under  such 
certificate  of  authority  has  been  granted  as  provided  in  section  625a  of 
the  Political  Code.  For  each  certificate  issued  the  county  clerk  shall 
receive  a  fee  of  fifty  cents  to  be  paid  by  the  person  obtaining  the  cer- 
tificate. 

Enacted  March  20,  1911.    Stats.  1911,  p.  412. 


90  INSURANCE  LAWS  OF  CALIFORNIA. 


PENAL  CODE. 


PART  I.     TITLE  XII. 

CRIMES  AGAINST  THE  REVENUE  OF  THE  STATE. 

Carrying  on  business  without  license. 

Sec.  435.  Every  person  who  commences  or  carries  on  any  business, 
trade,  profession,  or  calling,  for  the  transaction  or  carrying  on  of  which 
a  license  is  required  by  any  law  of  this  state,  without  taking  out  or  pro- 
curing the  license  prescribed  by  such  law,  is  guilty  of  a  misdemeanor. 

Enacted  February  14,  1872. 

Effecting  insurance  on  account  of  foreign  companies  that  have  not  complied 
with  the  laws  of  this  state. 

Sec.  439.  Every  person  who  in  this  state  procures,  or  agrees  to  pro- 
cure, any  insurance  for  a  resident  of  this  state,  from  any  insurance  com- 
pany not  incorporated  under  the  laws  of  this  state,  unless  such  company 
or  its  agent  has  filed  the  bond  required  by  the  laws  of  this  state  relating 
to  insurance,  is  guilty  of  a  misdemeanor. 

Enacted  February  14,  1872. 

On  the  20th  of  September,  1888,  one,  Hooper,  was  charged  before  a  police  court 
of  the  city  and  county  of  San  Francisco  with  having  committed  a  violation  of  this 
section,  as  follows :  On  the  13th  day  of  April,  1888,  C.  W.  Mott,  a  resident  of  the 
State  of  California,  applied  to  Hooper  to  procure  him  an  insurance  for  four  thousand 
dollars  on  the  steamer  "Alliance"  at  a  named  rate  of  premium.  Hooper  was  the 
agent  of  J.  &  H.,  insurance  brokers,  having  their  principal  place  of  business  in  New 
York,  who  procured  the  insurance  in  the  China  Mutual  Insurance  Company  of  Bos- 
ton and  forwarded  the  policy  to  Hooper,  who  delivered  it  to  Mott.  The  company 
mentioned  was  not  incorporated  under  the  laws  of  the  State  of  California,  and  had 
not  executed  and  delivered  to  the  insurance  commissioner  the  bond  required  by  section 
G23  of  the  Political  Code  of  the  State  of  California.  The  prisoner  was  convicted  and 
sentenced  to  pay  a  fine  of  five  dollars,  and,  in  default  to  be  imprisoned  for  twenty- 
four  hours  in  the  city  jail.  On  appeal  to  the  superior  court  the  judgment  of  the 
police  court  was  affirmed,  and  the  cause  was  taken  to  the  United  States  supreme 
court. 

It  was  argued  in  behalf  of  the  prisoner  that  the  section  amounts  to  a  regulation 
of  commerce  between  the  several  states  and  foreign  nations ;  that  it  violates  the  right 
of  the  defendant  to  transact  any  business  in  the  State  of  California  not  opposed  to 
good  morals  or  the  health  of  the  community ;  that  it  is  not  a  police  regulation ;  that 
it  is  in  violation  of  the  fourteenth  amendment,  and  for  these  reasons  unconstitutional. 

The  supreme  court  decided  that  the  business  of  insurance  is  not  commerce,  nor  an 
instrumentality  thereof,  but  merely  an  incident  thereto ;  that  the  policy  having  been 
delivered  within  the  state,  and  the  premium  paid  within  the  state,  the  insurance  was 
procured  within  the  state ;  that  the  fourteenth  amendment  does  not  guarantee  to  a 
citizen  the  right  to  contract  within  his  state  in  violation  of  its  laws,  and  that  the 
foreign  insurance  company  not  having  complied  with  the  laws  of  the  state  and  not 
having  given  the  bond  required  thereby,  the  prisoner  had  been  guilty  of  a  misde- 
meanor under  the  section  named,  which  the  court  declared  to  be  in  no  respect  uncon- 
stitutional.    {Hooper  vs.  State  of  California,  155  U.  S.  648.) 


PART  I.     TITLE  XIII.     CHAPTER  I. 

CRIMES  AGAINST  PROPERTY. 

"Arson"  defined. 

Sec.  447.     Arson  is  the  wilful  and  malicious  burning  of  a  building, 
with  intent  to  destroy  it. 

Enacted  February  14,  1872. 


CRIMES   AGAINST   PROPERTY.  91 

"Building"  defined. 

Sec.  448.  Any  house,  edifice,  structure,  vessel,  or  other  erection, 
capable  of  affording  shelter  for  human  beings,  or  appurtenant  to  or  con- 
nected with  an  erection  so  adapted,  is  a  "building"  within  the  meaning 
of  this  chapter. 

Enacted  February  14,  1872. 

"Inhabited  building"  defined. 

Sec.  449.  Any  building  which  has  usually  been  occupied  by  any 
person  lodging  therein  at  night  is  an  "inhabitated  building"  within  the 
meaning  of  this  chapter. 

Enacted  February  14,  1872. 

"Night-time"  defined. 

Sec.  450.  The  phrase  "night-time,"  as  used  in  this  chapter,  means 
the  period  between  sunset  and  sunrise. 

Enacted  February  14,  1872. 

"Burning"  defined. 

Sec.  451.  To  constitute  a  burning,  within  the  meaning  of  this 
chapter,  it  is  not  necessary  that  the  building  set  on  fire  should  have  been 
destroyed.  It  is  sufficient  that  fire  is  applied  so  as  to  take  effect  upon 
any  part  of  the  substance  of  the  building. 

Enacted  February  14,  1872. 

Ownership  of  the  building. 

Sec.  452.  To  constitute  arson  it  is  not  necessary  that  a  person  other 
than  the  accused  should  have  had  ownership  in  the  building  set  on  fire. 
It  is  sufficient  that  at  the  time  of  the  burning  another  person  was  right- 
fully in  possession  of,  or  was  actually  occupying  such  building,  or  any 
part  thereof. 

Enacted  February  14,  1872. 

Degrees  of  arson. 

Sec.  453.     Arson  is  divided  into  two  degrees. 
Enacted  February  14,  1872. 

Arson  of  the  first  degree.     Arson  of  the  second  degree. 

Sec.  454.  Maliciously  burning  in  the  night-time  an  inhabited  build- 
ing in  which  there  is  at  the  time  some  human  being,  is  arson  in  the  first 
degree.    All  other  kinds  of  arson  are  of  the  second  degree. 

Enacted  February  14,  1872. 

Punishment  of  arson. 

Sec.  455.  Arson  is  punishable  by  imprisonment  in  the  state  prison, 
as  follows : 

1.  Arson  in  the  first  degree,  for  not  less  than  two  years. 

2.  Arson  in  the  second  degree,  for  not  less  than  one  nor  more  than 
twenty-five  years. 

Enacted  February  14,  1872.    Amended,  Stats.  1901,  p.  664. 


92  INSURANCE  LAWS  OF  CALIFORNIA. 

PART  I.     TITLE  XIII.     CHAPTER  XI. 

Burning  or  destroying  property  insured. 

Sec.  548.  Every  person  who  wilfully  burns  or  in  any  other  manner 
injures  or  destroys  any  property  which  is  at  the  time  insured  against 
loss  or  damage  by  fire,  or  by  any  other  casualty,  with  intent  to  defraud 
or  prejudice  the  insurer,  whether  the  same  be  the  property  of  or  in  pos- 
session of  such  person,  or  of  any  other,  is  punishable  by  imprisonment 
in  the  state  prison  not  less  than  one  nor  more  than  ten  years. 

Enacted  February  14,  1872. 

Presenting  false  proofs  upon  policy  of  insurance. 

Sec.  549.  Every  person  who  presents  or  causes  to  be  presented  any 
false  or  fraudulent  claim,  or  any  proof  in  support  of  any  such  claim, 
upon  any  contract  of  insurance  for  the  payment  of  any  loss,  or  who  pre- 
pares, makes,  or  subscribes  any  account,  certificate  of  survey,  affidavit,  or 
proof  of  loss,  or  other  book,  paper,  or  writing,  with  intent  to  present  or 
use  the  same,  or  to  allow  it  to  be  presented  or  used  in  support  of  any 
such  claim,  is  punishable  by  imprisonment  in  the  state  prison  not  exceed- 
ing three  years,  or  by  a  fine  not  exceeding  one  thousand  dollars,  or  by 
both. 

Enacted  February  14,  1872. 


INSURANCE   COMMISSIONER.  93 


STATUTES. 


Act  of  March  26,  1868. 

The  following  sections  of  ■ '  An  act  creating  the  office  of  insurance  com- 
missioner, and  prescribing  his  duties  and  powers, ' '  approved  March  26, 
1868  (Stats.  1867-8,  p.  336),  were  considered  and  construed  by  the 
supreme  court  of  this  state  in  the  case  of  Palache  vs.  Pacific  Insurance 
Co.,  42  Cal.  418,  before  their  reenactment  in  the  Political  Code.  The 
sections  are: 

Sec.  7.  Whenever  the  liabilities  of  any  person  engaged  in  the  insur- 
ance business  for  losses  reported,  for  expenses,  taxes,  and  reinsurance  of 
all  outstanding  risks,  estimated  at  fifty  per  cent  of  the  premiums 
received  on  fire  risks  and  marine  time  risks,  and  at  the  entire  pre- 
miums on  all  other  marine  risks,  and  at  such  rates  for  life,  accidental 
and  other  kinds  of  insurance  as  shall  be  generally  accepted  by  the  actu- 
aries of  the  states  of  New  York  and  Massachusetts,  would  impair  his 
capital  stock  already  paid  in  to  an  extent  exceeding  twenty  per  cent, 
such  person  is  hereby  declared  to  be  insolvent. 

Sec.  8.  Whenever  it  shall  be  ascertained  by  the  commissioner  that 
any  person  engaged  in  the  insurance  business  in  this  state  is  insolvent, 
within  the  true  intent  and  meaning  of  this  act,  he  shall,  and  is  hereby 
empowered  to,  revoke  the  certificate  granted  in  behalf  of  such  person, 
and  shall  send  by  mail  to  such  person,  addressed  to  him  at  his  principal 
place  of  business,  or  deliver  to  him  personally,  notice  of  such  revocation, 
and  shall  cause  notice  of  such  revocation  to  be  filed  in  his  office,  and  also 
to  be  published  in  some  public  newspaper  published  in  the  city  of  San 
Francisco  for  at  least  four  weeks;  and  such  person  is  required,  after 
receiving  notice  of  said  revocation,  or  after  the  first  publication  thereof, 
to  discontinue  the  issuing  of  any  new  policies  and  the  renewal  of  any 
previously  issued ;  and  in  such  cases  the  commissioner  shall  require  the 
said  person,  or  his  manager  or  agent,  to  repair  its  capital  within  such 
period  as  he  may  designate  in  such  requisition.  Any  company,  corpora- 
tion, or  association  receiving  the  aforesaid  requisition  from  the  commis- 
sioner shall  forthwith  call  upon  its  stockholders,  by  assessments,  for  such 
amounts  as  will  make  its  capital  equal  to  the  amount  of  its  paid-up  cap- 
ital, exclusive  of  assets  needed  to  pay  all  ascertained  liabilities  for  losses 
reported,  for  expenses  and  taxes,  and  exclusive  of  the  entire  premiums 
received  for  outstanding  risks ;  and  in  case  any  stockholder  shall  refuse 
or  neglect  to  pay  the  amount  so  called  for,  it  shall  be  lawful  for  said 
company,  corporation,  or  association  to  enforce  said  assessment  by  such 
notice  and  sale  as  are  provided  for  by  the  act  entitled  "An  act  concern- 
ing assessments  upon  the  stock  of  corporations,"  approved  March 
twenty-sixth,  eighteen  hundred  and  sixty-six.  In  case  any  person,  upon 
the  requisition  of  the  commissioner  as  aforesaid,  shall  fail  to  make  up  the 
deficiency  of  his  capital  in  accordance  with  the  requirements  aforesaid, 
or  to  comply  in  all  respects  with  the  insurance  laws  of  this  state,  the 
commissioner  shall  communicate  the  fact  to  the  attorney  general,  whose 
duty  it  shall  then  become  to  commence  an  action  in  the  name  of  the  peo- 
ple of  this  state,  in  the  district  court  of  the  judicial  district  where  the 


94  INSURANCE  LAWS  OF  CALIFORNIA. 

person  in  question  is  located,  or  has  his  principal  office,  against  such  per- 
son, and  apply  for  an  order  requiring  him  to  show  cause  why  his  busi- 
ness should  not  be  closed ;  and  the  court  shall  thereupon  proceed  to  hear 
the  allegations  and  proofs  of  the  respective  parties  as  in  other  cases ;  and 
in  case  it  shall  appear  to  the  satisfaction  of  the  court  that  such  person  is 
insolvent,  as  aforesaid,  or  that  the  interests  of  the  public  so  require,  the 
court  shall  decree  a  dissolution  of  such  company,  corporation,  association, 
or  firm,  and  a  winding  up  of  its  affairs  and  a  distribution  of  the  effects 
of  such  person.  But  otherwise  the  court  shall  enter  a  decree  annulling 
the  act  of  the  commissioner  in  the  premises,  and  authorizing  such  person 
to  resume  business.  But  the  commissioner  shall  not  be  held  liable  for 
damages  in  the  attempted  performance  of  his  duty  herein,  if  he  has  acted 
in  good  faith.  In  the  event  of  any  additional  losses  occurring  upon  new 
risks  taken  after  the  expiration  of  the  period  limited  by  the  commissioner 
in  the  requisition,  and  before  the  deficiency  shall  have  been  filled  up,  the 
directors  of  any  company,  corporation,  or  association  shall  be  individ- 
ually liable  to  the  extent  thereof. 

In  the  case  just  mentioned  it  appeared  from  the  agreed  statement  of  facts  that 
the  insurance  commissioner  had  made  an  examination  of  the  business  affairs  of  the 
defendant  company,  on  the  20th  day  of  October,  1871,  and  found  its  capital  to  be 
impaired  in  consequence  of  the  disastrous  Chicago  fire.  He  then  notified  the  com- 
pany to  repair  its  capital  on  or  before  the  30th  day  of  December,  1891,  but  did  not 
revoke  his  certificate  of  authority  to  do  business,  and  did  not  publish  any  notice  of 
revocation  of  such  certificate  of  authority. 

Immediately  on  receiving  the  notice  of  the  insurance  commissioner,  the  board  of 
directors  of  the  defendant  company  assembled  and  levied  an  assessment  of  seventy- 
five  per  cent  upon  the  capital  stock.  At  that  time  a  general  statute  provided  that 
no  one  assessment  should  exceed  five  per  cent  of  the  stated  amount  of  capital  stock 
of  any  corporation.     (Stats.  1865-6,  p.  458.) 

At  the  time  of  the  levy  of  the  assessment  mentioned,  one  Ashburner  was  the 
owner  of  a  certificate  for  ten  shares  of  the  capital  stock  of  the  defendant  company, 
and  afterwards,  on  the  30th  day  of  October,  1871,  sold  and  assigned  the  same,  in  due 
form,  to  plaintiff  in  said  action. 

A  by-law  of  the  defendant  company  provided  that  no  transfer  of  stock  should  be 
made  upon  the  books  of  the  company  until  after  payment  of  all  assessments  imposed 
thereon. 

On  the  day  of  the  transfer  mentioned,  the  plaintiff,  as  the  assignee  of  Ashburner. 
tendered  the  said  certificate  of  stock  for  cancellation,  and  requested  the  officers  of 
the  company  to  enter  the  transfer  upon  the  books  of  the  corporation,  and  to  issue  to 
him  a  new  certificate  for  the  said  number  of  shares ;  but  these  officers  refused  to  do 
so,  upon  the  ground  that  an  assessment  of  seventy-five  per  cent  had  been  duly  levied 
upon  the  capital  stock,  which  had  not  been  paid  (and  which  plaintiff  refused  to 
pay),  in  conformity  with  said  by-law. 

The  defendant  brought  this  action  to  compel  said  transfer,  and  judgment  going 
for  the  defendant  company  in  the  lower  court,  appealed  to  the  supreme  court  of  this 
state. 

On  the  appeal  it  was  urged  that,  under  the  by-law  quoted,  plaintiff  was  entitled 
to  have  the  transfer  of  stock  made  on  the  books  of  the  company  in  accordance  with 
his  demand,  for  the  reason  that  an  assessment  in  excess  of  five  per  cent  was  pro- 
hibited by  the  general  act  of  March  26,  1866,  and  therefore  void,  unless  the  levy  of 
seventy-five  per  cent  was  justified  under  the  provisions  of  the  act  of  March  26,  1868. 
by  the  notification  by  the  insurance  commissioner  to  the  defendant  company,  to 
repair  its  capital  within  the  time  stated;  that  the  insurance  commissioner  had  not 
complied  with  the  requirements  of  the  latter  act  in  failing  to  revoke  his  certificate 
of  authority  and  to  advertise  the  insolvency  of  the  company ;  and,  consequently,  his 
acts  in  the  premises,  and  the  levy  of  the  assessment  based  thereon,  were  unlawful 
and  void.  .      .  T 

The  action  of  the  commissioner,  therefore,  was  the  sole  point  in  controversy.  In 
disposing  of  this  point  the  court  said: 

It  was  objected  in  argument  upon  the  part  of  the  appellant,  that  the  requisi- 
tion of  the  commissioner,  by  which  he  required  the  company  to  repair  their  capital 
stock,  and  in  assumed  obedience  to  which  the  company  levied  the  assessment  com- 
plained of,  was  itself  invalid  and  unauthorized  by  the  provisions  of  the  statute 
already  referred  to,  because  the  commissioner  did  not  then,  nor  at  any  time,  revoke 
the  certificate  of  authority  which  he  had  previously,  under  section  4  of  the  statute, 
granted   to   the   company,    authorizing   it   to   transact   insurance   business.      It   was 


INSURANCE    COMMISSIONER.  95 

argued,  in  this  connection,  that  the  phrase  "in  such  cases,"  occurring  in  section  8, 
and  denning  the  cases  in  which  such  a  requisition  is  authorized,  embraces  only  those 
cases  in  which  the  commissioner  had  not  only  ascertained  the  fact  of  insolvency,  but 
had  also  revoked  the  certificate  itself.  It  was  said  that  the  language  employed  in 
the  statute  (section  8),  is  mandatory  upon  the  commissioner,  that  whenever  he  shall 
ascertain  the  fact  of  insolvency,  he  shall,  and  is  hereby  empowered  to  revoke  "the 
certificate  granted,"  etc.  It  is  well  settled  that  in  the  construction  of  statutes,  for 
the  purpose  of  ascertaining  the  legislative  intent,  regard  is  to  be  had  not  so  much  to 
the  exact  phraseology  in  which  that  intent  has  been  expressed,  as  to  the  general 
tenor  and  scope  of  the  entire  legislative  scheme  embodied  in  the  act. 

Mere  philology  often  sticks  in  the  bark,  and  so  becomes  an  obstruction  rather 
than  an  aid  to  the  correct  exposition  of  the  meaning  of  the  statute.  The  act  under 
consideration  plainly  distinguishes  between  the  effect  of  a  revocation  notified  and  a 
requisition  received.  In  the  former  case  it  declares  that  the  company  shall  abso- 
lutely discontinue  the  taking  of  new  risks,  the  issuing  of  new  policies,  and  the  renewal 
of  old  ones.  (Section  8.)  Such  revocation  deprives  the  company  of  the  certificate 
of  authority  which  (under  section  9)  it  must  possess  before  it  can  be  lawful  to 
transact  insurance  business  at  all,  "and  all  policies  issued  or  renewed,  and  all  insur- 
ance taken  before  the  issuance  of  such  certificate,  shall  be  null  and  void  for  all  pur- 
poses whatsoever."  (Section  9.)  But  the  consequences  of  a  requisition  for  the 
repair  of  capital  stock  upon  insurance  business  transacted  intermediate  the  receipt 
of  the  requisition  and  the  expiration  of  the  time  therein  limited  are  widely  different 
from  those  which  ensue  upon  a  revocation  notified.  The  company  may,  of  course,  at 
once  and  without  delay,  supply  the  deficiency  in  its  capital  stock,  and  in  that  event 
the  transaction  of  its  business  is  wholly  unaffected  by  the  requisition  made.  Other- 
wise it  may,  at  its  option,  suspend  the  taking  of  insurances  and  the  issuance  of  new 
policies  during  the  time  limited  in  the  requisition ;  or,  if  it  prefer,  it  may  take  such 
new  risks,  even  before  the  deficiency  in  its  capital  stock  be  supplied,  the  directors 
being  in  that  case,  however,  personally  liable  for  any  loss  which  may  occur  upon 
such  new  risks  thus  taken.  But  if  we  are  to  hold  that  in  every  case  where  a  requisi- 
tion to  repair  capital  stock  is  received  a  revocation  must  first  be  notified,  it  is  obvious 
that  the  revocation  must  operate  to  utterly  destroy  the  privilege  plainly  acceded  to 
the  company  intermediate  the  receipt  of  the  mere  requisition  and  the  expiration  of 
the  time  therein  limited  for  making  the  required  repair  of  the  capital  stock.  A  con- 
struction involving  such  results  would  be  in  plain  conflict  with  the  apparent  intent 
had  in  view  by  the  statute.  There  are  other  considerations,  too,  which  present  them- 
selves, if  attention  be  had  to  the  general  scope  of  the  act  and  the  purpose  in  which 
it  originated,  and  which  confirm  us  in  the  view  we  have  expressed  upon  this  point. 

The  duties  imposed  upon  the  commissioner  of  insurance,  though  defined  in  a  gen- 
eral way,  are  in  their  nature  largely  discretionary,  and  depend  for  their  efficient  per- 
formance in  a  great  degree  upon  the  exercise  by  him  of  an  enlightened  and  careful 
discrimination  with  reference  to  the  circumstances  surrounding  each  particular  case 
with  which  he  is  expected  to  deal.  He  is  generally  to  do  and  perform,  with  justice 
and  impartiality,  the  duties  of  his  office  in  connection  with  the  laws  regulating  the 
business  of  insurance  in  this  state,  and  to  enforce  the  execution  of  such  laws  accord- 
ing to  the  true  intent  and  meaning  thereof  (section  4.)  With  this  view  he  is  clothed 
with  important  powers,  to  be  exercised  to  a  greater  or  less  extent  according  as  the 
particular  circumstances  appearing  may,  in  his  judgment,  require.  It  may  be,  for 
instance,  that  an  insurance  company  is  ascertained  by  him  to  be  insolvent  in  fact 
and  in  a  commercial  sense,  and  the  risks  to  be  taken  by  such  a  company  therefore 
absolutely  worthless  to  the  assured.  In  such  a  case  it  may,  and  doubtless  would  be, 
his  duty  to  exert  the  high  authority  devolved  upon  him  by  law,  to  revoke  its  certifi- 
cate at  once,  as  the  only  means  by  which  the  interests  of  the  public  could  be  pre- 
served. Such  a  case  would,  however,  be  clearly  and  easily  distinguishable  from 
another,  in  which  there  was  found  to  be  only  the  technical  insolvency  defined  by  the 
provisions  of  the  statute  itself. 

For  it  will  be  observed  that  section  7  of  the  act  establishes  a  test  of  solvency  and 
insolvency  of  a  merely  arbitrary  character  and  under  the  operation  of  which  an 
insurance  company  may,  within  the  intent  and  for  the  purposes  of  the  statute,  be 
held  insolvent,  and  at  the  same  time  be  not  only  really  and  actually  solvent  in  a 
business  sense,  but  justly  so  regarded  in  the  commercial  world.  Thus,  in  order  to 
ascertain  the  present  condition  of  the  company  as  being  one  of  solvency  or  insol- 
vency, for  the  mere  purposes  of  the  statute,  the  commissioner  must  assume,  against 
the  condition  of  solvency,  that  certain  losses,  though  yet  in  fact  only  reported,  are 
already  established  and  ascertained;  that  in  relation  to  outstanding  risks,  not  yet 
heard  from  even  by  report,  all  of  those  of  one  and  half  of  those  of  another  desig- 
nated class  will  eventually  prove  to  be  losses ;  and  the  probable  losses  thereafter  to 
be  sustained  upon  outstanding  risks  of  yet  another  general  character  are  to  be 
arrived  at  by  applying  the  rules  of  calculation  in  such  cases  adopted  by  the  actuaries 
in  the  states  of  New  York  and  Massachusetts.  ,,-,-, 

If  under  the  provisions  of  the  statute  the  commissioner  should  determine,  upon  a 
proper  investigation  had,  that  the  company,  though  insolvent  within  the  intent  of 
the  act,  was,  nevertheless,  solvent  in  a  business  point  of  view,  we  should  be  surprised 
to  find,  and  we  do  not  find,  upon  examination  of  the  act,  that  he  had  no  discretion 


96  INSURANCE  LAWS  OF  CALIFORNIA. 

to  stop  with  the  delivery  of  the  requisition,  but  must  of  mere  legal  necessity,  resort 
to  the  harsher  measure  of  an  absolute  revocation  of  the  company's  certificate.  We 
would,  we  think,  greatly  misapprehend  the  scope  and  purpose  of  the  act  should  we 
hold  that  under  its  provisions,  the  commissioner  is  to  exercise  no  discretion  in  this 
most  important  respect,  but  that,  being  once  put  in  motion,  he  must  in  all  cases, 
nolens  volens,  proceed  to  the  same  and  a  uniform  extremity  against  all  companies 
with  whose  financial  condition  he  is  called  upon  to  deal,  and  that  he  can  not  legally 
require  a  company  to  merely  repair  its  capital,  even  in  a  case  where  such  repair  is 
all  that  is  needed,  but  must  first  revoke  its  certificate,  suspend,  and  perhaps  thereby 
nearly  destroy  its  business,  and  certainly  injure  its  general  credit  in  advance  by  an 
official  promulgation  of  his  judgment,  that  the  company  is  wholly  unfit  to  transact 
business  at  all,  and  that  only  after  that  step  has  been  taken,  and  notice  thereof 
''published  in  some  public  newspaper  published  in  the  city  of  San  Francisco  for  at 
least  four  weeks,"  is  he  to  call  upon  the  company  to  repair  its  capital — if  it  can. 

We  think  that  such  an  interpretation  of  the  statute  would,  in  its  inevitable  con- 
sequences, involve  the  absolute  destruction  of  the  business  of  insurance,  instead  of 
regulating  its  transactions. 

Palache  vs.  Pacific  Insurance  Co.,  42  Cal.  418. 


An  act  to  facilitate  the   giving   of  bonds   required   by   law. 
[Approved  March  12,  1885.     Stats.  1885,  p.  114.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Whenever  any  person  who  now  or  hereafter  may  be 
required  or  permitted  by  law  to  make,  execute,  and  give  a  bond  or 
undertaking,  with  one  or  more  sureties,  conditioned  for  the  faithful  per- 
formance of  any  duty,  or  for  the  doing  or  not  doing  of  anything  in  said 
bond  or  undertaking  specified,  any  head  of  department,  board,  court, 
judge,  officer,  or  other  person  who  is  now  or  shall  hereafter  be  required 
to  approve  the  sufficiency  of  any  such  bond  or  undertaking,  or  the 
sureties  thereon,  may  accept  as  sole  and  sufficient  surety  on  such  bond 
or  undertaking,  any  corporation  incorporated  under  the  laws  of  any 
state  of  the  United  States  for  the  purpose  of  making  or  guaranteeing 
bonds  and  undertakings  required  by  law,  and  which  shall  have  complied 
with  all  the  requirements  of  the  laws  of  this  state  regulating  the  admis- 
sion of  such  corporation  to  transact  such  business  in  this  state ;  and  all 
such  corporations  are  hereby  vested  with  full  power  and  authority  to 
make  and  guarantee  such  bonds  and  undertakings,  and  shall  be  subject 
to  all  the  liabilities  and  entitled  to  all  the  rights  of  natural  persons 
sureties. 

Sec.  2.  It  is  further  provided  that  the  guaranty  of  any  such  com- 
pany shall  not  be  accepted  by  heads  of  departments  or  others,  as  pro- 
vided in  section  1  of  this  act,  whenever  its  liabilities  shall  exceed  its 
assets,  as  ascertained  in  the  manner  provided  in  section  3  of  this  act. 

Sec.  3.  Whenever  the  liabilities  of  any  such  company  shall  exceed 
its  assets,  the  insurance  commissioner  shall  require  the  deficiency  to  be 
paid  up,  within  sixty  days,  and  if  it  is  not  so  paid  up,  then  he  shall  issue 
a  certificate  showing  the  extent  of  such  deficiency,  and  he  shall  publish 
the  same  once  a  week  for  three  weeks,  in  a  daily  San  Francisco  paper, 
and  thenceforth,  and  until  such  deficiency  is  paid  up,  such  company 
shall  not  do  business  under  the  provisions  of  this  act.  And,  in  estimat- 
ing the  condition  of  any  such  company,  under  the  provisions  of  this  act, 
the  commissioner  shall  allow  as  assets  only  such  as  are  authorized  under 
existing  laws  at  the  time,  and  shall  charge  as  liabilities,  in  addition  to 
eighty  per  cent  of  the  capital  stock,  all  outstanding  indebtedness  of  the 
company,  and  a  premium  reserve  equal  to  fifty  per  centum  of  the  pre- 


COUNTY   FIRE   INSURANCE.  97 

miums  charged  by  said  company  on  all  risks  then  in  force.     Nothing 
herein  contained  shall  apply  to  bonds  given  in  criminal  cases. 

Sec.  4.     This  act  shall  take  effect  immediately. 

See  sections  1056t1057,  1057a,  Code  of  Civil  Procedure,  ante. 

An  act  to  require  the  payment  of  certain  premiums  to  counties  and  cities  and 
counties,  by  fire  insurance  companies  not  organized  under  the  laws  of  the 
State  of  California,  but  doing  business  therein,  and  providing  for  the  dispo- 
sition of  such  premiums. 

[Enacted,  Stats.  1885,  p.  13.    Amended,  Stats.  1887,  p.  13.J 
This  act  was  declared  unconstitutional  by  the  supreme  court  of  this 
state,  which  rendered  its  decision  to  that  effect  on  November  10,  1887. 

An  action  was  brought  to  recover  $441.36,  with  interest,  under  an  act  of  the 
legislature,  entitled  "An  act  to  require  the  payment  of  certain  premiums  to  counties 
and  cities  and  counties  by  fire  insurance  companies  not  organized  under  the  laws  of 
California,  but  doing  business  therein,  and  providing  for  the  disposition  of  such 
premiums,"  approved  March  3,  1885.  The  act  required  payment  of  one  per  cent  of 
the  premiums  of  such  companies  to  constitute  a  fund  to  be  known  as  the  firemen's 
relief  fund,  etc. 

It  was  claimed,  on  the  part  of  the  appellant,  that  the  act  created  a  tax  the  exac- 
tion of  which  was  illegal,  as  violative  of  section  12,  article  XI  of  the  state  consti- 
tution. Respondent  claimed  it  to  be  a  condition  upon  the  performance  of  which 
foreign  corporations  were  permitted  to  do  business  in  this  state.  The  court  took  the 
former  view,  and  reversed  the  judgment,  citing :  Barron  vs.  Burnside,  121  U.  S.  186, 
and  Trustees  Exempt  Firemen's  Fund  vs.  Roome,  93  N.  Y.  325,  s.  c.  45  Am.  Rep.  217. 

San  Francisco  vs.  Liverpool  and  London  and  Globe  Insurance  Co.,  74  Cal.  113. 

An   act  to  provide  for  the  organization   and   management  of  county  fire   insur- 
ance  companies. 

[Approved  April  1,  1897 :   Stats.  .1897,  p.  439.     Amended  March  23,  1907 ;   Stats. 
1907,  p.  941.     Amended  April  15,  1909;  Stats.  1909,  p.  912.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 
Incorporation. 

Section  1.  Any  number  of  persons,  not  less  than  twenty-five,  resid- 
ing in  any  county  in  this  state,  owning  insurable  property  aggregating 
not  less  than  fifty  thousand  dollars  in  value,  which  they  desire  to  have 
insured,  may  incorporate  for  the  purpose  of  mutual  insurance  against 
loss  or  damage  by  fire. 

Filing  of  articles  of  incorporation — Certificate. 

Sec.  2.  Such  persons  shall  file  with  the  insurance  commissioner  a 
declaration  of  their  intention  to  incorporate  for  the  purposes  expressed 
in  section  one  of  this  act,  which  declaration  shall  be  signed  by  all  of  the 
incorporators,  and  shall  contain  a  copy  of  the  articles  of  incorporation 
proposed  to  be  adopted.  The  insurance  commissioner  shall  examine  the 
proposed  articles  of  incorporation,  and,  if  they  conform  to  this  act,  he 
shall  deliver  to  such  persons  a  certificate  permitting  them  to  incorporate 
as  such  insurance  company.  Such  certificate  shall  be  directed  to  the 
clerk  of  the  county  in  which  such  corporation  is  proposed  to  be  organ- 
ized, and  shall  contain  a  copy  of  the  proposed  articles  of  incorporation. 
Upon  filing  with  the  secretary  of  state  the  certified  copies  of  the  duly 
executed  articles  of  incorporation,  as  required  by  section  290  of  the 
Civil  Code  of  the  State  of  California,  and  of  the  certificate  above  pro- 
vided for,  the  secretary  of  state  shall  thereupon  issue  a  certificate  of 
incorporation  to  such  county  insurance  company,  and,  upon  organizing 
under  such  articles  of  incorporation,  such  county  fire  insurance  com- 

7 — IN 


98  INSURANCE  LAWS  OF  CALIFORNIA. 

pany  may  carry  on  a  fire-insurance  business  as  hereinafter  provided. 
The  articles  of  incorporation  and  the  charter  or  certificate  obtained  by 
any  county  fire-insurance  company  operating  under  the  provisions  of 
this  act  shall  be  subject  to  the  control  and  modification  by  the  legislature 
of  the  State  of  California.  The  by-laws  and  all  amendments  thereto 
shall  be  filed  with  the  insurance  commissioner  within  sixty  (60)  days 
after  their  adoption. 

Directors. 

Sec.  3.  The  number  of  directors  shall  not  be  less  than  seven  (7), 
nor  more  than  eleven  (11),  a  majority  of  whom  shall  constitute  a 
quorum  to  do  business.  These  directors  shall  be  elected  from  the 
members  of  the  association  by  ballot,  and  shall  hold  office  for  one  year, 
or  until  their  successors  are  elected  and  qualified.  The  annual  meeting 
of  the  members  of  the  company  shall  be  on  the  second  Monday  in  Jan- 
uary of  each  year.  In  the  election  of  the  first  board  of  directors  each 
member  shall  be  entitled  to  one  vote.  At  every  subsequent  election, 
every  person  insured  shall  be  entitled  to  as  many  votes  as  there  are 
directors  to  be  elected,  and  an  equal  additional  number  for  every  risk  or 
risks  he  holds  in  the  company,  and  he  may  cast  the  same  in  person  or  by 
proxy,  distributing  them  among  the  directors  to  be  elected,  or  among  a 
less  number  of  directors,  or  cumulating  them  upon  one  candidate,  as  he 
shall  see  fit. 
Officers. 

Sec.  4.  The  directors  shall  elect,  from  their  own  number,  a  presi- 
dent and  a  vice-president,  and  shall  also  elect  a  treasurer  and  a  secre- 
tary, who  may  or  may  not  be  members  of  the  company.  All  of  such 
officers  hold  their  office  for  one  year  from  the  date  of  their  election,  and 
until  their  successors  are  elected  and  qualified. 

Bonds. 

Sec.  5.     The  treasurer  and  secretary  shall  give  bonds  to  the  company 
for  the  faithful  performance  of  their  duties,  in  such  amounts  as  shall  be 
prescribed  by  the  board  of  directors. 
Powers — By-laws. 

Sec.  6.  Such  corporation  and  its  directors  shall  possess  the  usual 
powers,  and  be  subject  to  the  usual  duties  of  corporations  and  directors 
thereof,  and  may  make  such  by-laws,  not  inconsistent  with  the  constitu- 
tion and  the  laws  of  this  state,  as  may  be  deemed  necessary  for  the  man- 
agement of  its  affairs,  in  accordance  with  the  provisions  of  this  act. 
Also  to  prescribe  the  duties  of  its  officers  and  to  fix  their  compensation, 
and  to  alter  and  amend  its  by-laws,  when  necessary. 

Membership. 

Sec.  7.  Any  person  owning  property  in  the  county  for  which  any 
such  company  is  formed  or  any  person  owning  property  in  any  county 
adjoining  the  county  wherein  such  company  is  formed  as  hereinafter 
provided  may  become  a  member  of  such  company  by  insuring  therein, 
and  shall  be  entitled  to  all  the  rights  and  privileges  appertaining 
thereto ;  and  no  person  not  residing  in  the  county  in  which  the  company 
is  formed  shall  become  a  director  of  such  company. 

Section  7  amended  March  23,  1907. 


COUNTY   FIRE   INSURANCE.  99 

Risks. 

Sec.  8.  Such  company  may  issue  policies  only  on  detached  dwell- 
ings, schoolhouses,  churches,  barns  (except  livery  barns  and  hotel 
barns),  and  other  farm  buildings,  and  such  property  as  may  be  con- 
tained therein;  also,  other  property  on  the  premises  owned  by  the 
insured;  hay  and  grain  in  stack  or  in  the  field  and  live  stock  on  the 
premises  of  the  insured,  anywhere  in  the  county,  for  any  time  not 
exceeding  five  years,  and  not  to  extend  beyond  the  time  limited  for  the 
existence  of  the  charter,  and  for  an  amount  not  to  exceed  four  thou- 
sand five  hundred  dollars  on  any  one  risk;  provided,  that  no  company 
which  has  been  organized  more  than  six  months  shall  write  insurance 
subject  to  one  fire  exceeding  three  per  cent  of  the  amount  of  risk  upon 
the  books  of  such  company.  All  persons  so  insured  shall  give  their  obli- 
gation to  the  company,  binding  themselves,  their  heirs  and  assigns,  to 
pay  their  pro  rata  share  to  the  company  of  the  necessary  expense  and  of 
loss  by  fire  which  may  be  sustained  by  any  member  thereof  during  the 
time  for  which  their  respective  policies  are  written,  and  they  shall  also 
at  the  time  of  effecting  the  insurance  pay  such  a  percentage  in  cash,  and 
such  other  charges,  as  may  be  required  by  the  rules  or  by-laws  of  the 
company. 

A  creamery  can  not  be  insured  in  a  county  mutual.  It  is  not  "a  farm  building'' 
within  the  terms  of  the  statute:  Opinion  of  the  Attorney  General,  November  7,  1901. 

Classifying  risks. 

Sec.  9.     All   such   companies   must   classify   the   property   insured 
therein  at  the  time  of  issuing  policies  thereon  under  different  rates, 
corresponding  as  nearly  as  may  be  to  the  greater  or  less  risk  from  fire 
loss  which  may  be  attached  to  the  several  kinds  of  property  insured. 
Limitations  upon  risks  taken. 

Sec.  10.  No  such  company  shall  insure  any  property  beyond  the 
limits  of  the  county  wherein  the  said  company  is  organized,  except  that 
a  company  may  insure  in  any  county  next  adjoining  the  county  wherein 
such  company  is  organized.  Nor  shall  any  such  company  issue  policies 
on  property  situated  within  the  corporate  limits  of  any  city  or  town  in 
excess  of  four  thousand  five  hundred  dollars  on  any  one  risk,  under  one 
or  more  policies.  No  adjoining  risks  can  be  taken  by  such  company 
unless  a  clear  space  of  at  least  one  hundred  and  fifty  feet  intervenes, 
and  such  intervening  space  must  continue  at  not  less  than  one  hundred 
feet  during  the  life  of  the  policy.  Nor  shall  any  risk  be  taken  on  any 
building  closer  than  one  hundred  feet  to  any  business  property,  provided 
the  amount  of  the  insurance  shall  not  exceed  seventy-five  per  cent  of 
the  value  of  the  property,  and  no  additional  insurance  shall  be  allowed. 

Section  amended  April  15,  1909 ;  in  effect  in  sixty  days.     Amended 
May  1,  1911.    Stats.  1911,  p.  1339. 
Adjustment  of  losses — Arbitration. 

Sec.  11.  Every  member  of  such  company  who  may  sustain  loss  or 
damage  by  fire  shall  immediately  notify  the  president,  or  in  his  absence, 
the  secretary  thereof,  stating  the  amount  of  damage  or  loss  sustained  or 
claimed,  and  if  not  more  than  fifteen  hundred  dollars,  then  the  presi- 
dent and  secretary  shall  proceed  to  ascertain  the  amount  of  such  loss  or 
damage  and  adjust  the  same.  If  the  claim  for  damage  or  loss  be  for  an 
amount  greater  than  fifteen  hundred  dollars,  then  the  president  of  such 
company,  or  in  his  absence,  the  vice-president,  or  in  the  absence  of  both, 


100  INSURANCE  LAWS  OF  CALIFORNIA. 

the  secretary  thereof,  shall  forthwith  convene  the  board  of  directors  of 
such  company,  whose  duty  it  shall  be  when  convened,  to  appoint  a  com- 
mittee, of  not  less  than  three  disinterested  members  of  such  company,  to 
ascertain  the  amount  of  such  damage  or  loss.  If  in  either  case  there  is 
a  failure  of  the  parties  to  agree  upon  the  amount  of  such  damage  or 
loss  they  may  submit  the  question  of  the  amount  of  such  loss  to  arbitra- 
tion, and  in  that  event  the  president  of  the  company  shall  appoint  one 
disinterested  person  to  act  as  an  arbitrator,  and  the  claimant  or  insured 
shall  appoint  another,  and  if  such  two  arbitrators  fail  to  agree  upon  the 
amount  of  such  loss,  then  they  shall  select  a  third  disinterested  person 
to  act  with  them,  and  such  arbitrators  so  appointed  shall  have  full 
authority  to  examine  witnesses  and  to  do  all  other  things  necessary  to 
the  proper  determination  of  the  amount  of  loss  sustained  by  the  claim- 
ant, and  shall  make  their  award  in  writing  to  the  president  of  the  com- 
pany, and  to  the  insured,  and  such  award  so  as  aforesaid  made,  shall  be 
final  as  to  the  amount  of  the  loss  sustained.  The  pay  of  said  committee 
shall  be  three  dollars  per  day  for  each  day's  services  so  rendered,  and 
five  cents  for  each  mile  necessarily  traveled  in  the  discharge  of  their 
duties,  which  shall  be  paid  by  the  claimant  unless  the  award  of  such  com- 
mittee shall  exceed  the  sum  offered  by  the  company  in  liquidation  of 
such  loss  or  damage,  in  which  case  such  expense  shall  be  paid  by  the 
company. 

Section  11  amended  April  15,  1909 ;  in  effect  in  sixty  days. 

Assessments  for  deficiency. 

Sec.  12.  When  the  amount  of  any  loss  shall  have  been  ascertained, 
which  exceeds  in  amount  the  cash  funds  of  the  company,  the  president 
shall  convene  the  directors  of  said  company,  who  shall  make  an  assess- 
ment upon  all  the  property  to  the  amount  for  which  each  several  piece 
of  property  is  insured,  taken  in  connection  with  the  rate  of  premium 
under  which  it  may  be  classified;  provided,  further,  that  the  board  of 
directors  may  at  their  annual  meeting  levy  an  assessment  not  to  exceed 
twenty-five  cents  on  the  one  hundred  dollars  on  first-class  insurance  and 
a  pro  rata  amount  on  other  classes  and  said  sum  so  raised  shall  consti- 
tute a  reserve  fund  to  be  used  in  emergency  cases  only  and  another 
assessment  for  this  fund  shall  not  be  made  while  this  reserve  remains 
intact. 

Section  12  amended  March  23,  1907. 

Notice  of  assessment. 

Sec.  13.  It  shall  be  the  duty  of  the  secretary,  whenever  such  an 
assessment  shall  have  been  made,  to  immediately  notify  every  person 
holding  a  risk  in  such  company,  personally,  by  an  agent,  or  by  letter 
directed  to  his  usual  post  office  address,  of  the  amount  of  such  loss,  and 
the  sum  due  from  him,  as  his  share  thereof,  and  of  the  time  and  to 
whom  such  payment  is  to  be  made ;  but  such  time  shall  not  be  less  than 
thirty  days,  nor  more  than  ninety  days  from  the  date  of  such  notice. 
Action  for  neglect  or  refusal  to  pay  assessment. 

Sec.  14.  An  action  may  be  brought  against  any  member  of  such 
company  who  shall  neglect  or  refuse  to  pay  any  assessment  made  upon 
him  by  the  provisions  of  this  act,  or  other  liabilities  due  the  company, 
and  the  directors  of  any  company  so  formed  who  shall  wilfully  refuse 
or  neglect  to  perform  the  duties  imposed  upon  them  by  law  or  by  the 


COUNTY   FIRE   INSURANCE.  101 

by-laws  of  the  company  shall  be  liable  in  their  individual  capacity  to 
the  person  sustaining  such  loss.  An  action  may  also  be  brought  and 
maintained  against  any  such  company  by  members  thereof  for  losses 
sustained  if  payment  is  withheld  after  the  amount  of  such  losses  have 
been  determined,  and  is  due  by  the  terms  of  the  policy. 

Annual  statement. 

Sec.  15.  It  shall  be  the  duty  of  the  secretary  to  prepare  an  annual 
statement  showing  the  condition  of  such  company  on  the  thirty-first  day 
of  December,  and  present  the  same  at  the  annual  meeting. 

Withdrawal. 

Sec.  16.  Any  member  of  such  company  may  withdraw  therefrom  by 
surrendering  his  policy  for  cancellation  at  any  time  while  the  organiza- 
tion continues  the  business  for  which  it  was  organized,  by  giving  notice 
in  writing  to  the  secretary  thereof,  and  paying  his  share  of  all  claims 
that  may  exist  against  such  company ;  provided,  that  the  company  shall 
have  power  to  cancel  or  terminate  any  policy  by  giving  the  insured  five 
days'  written  notice  to  that  effect,  and  returning  to  him  any  excess  of 
premium  he  may  have  paid  during  the  term  of  the  policy,  over  the 
cost  of  his  insurance,  as  measured  by  the  rates  of  standard  fire  insur- 
ance companies  doing  business  in  this  state. 

Report  of  officers. 

Sec.  17.  It  shall  be  the  duty  of  the  president  and  secretary  within 
thirty  days  after  the  first  day  of  January  in  each  year,  to  prepare, 
under  their  own  oath,  and  transmit  to  the  insurance  commissioner,  a 
statement  of  the  condition  of  the  company  on  the  last  day  of  the  month 
next  preceding  the  annual  meeting.  If,  upon  examination,  the  insur- 
ance commissioner  finds  that  such  company  is  doing  business  correctly, 
in  accordance  with  the  provisions  of  this  act,  he  shall  thereupon  furnish 
the  company  his  certificate,  which  shall  be  deemed  authority  to  continue 
business  during  the  ensuing  year,  subject,  however,  to  the  provisions  of 
this  act.  For  such  examination  and  certificate  the  company  shall  pay 
one  dollar.  Each  company  shall  pay  at  the  time  of  organization,  five 
dollars  to  the  insurance  commissioner,  for  all  services  which  he  shall 
render  in  the  matter  of  organization. 
Dissolution. 

Sec.  18.     Any  such  company  may  be  proceeded  against  and  dissolved 
in  the  manner  and  upon  the  same  conditions  as  provided  in  case  of  other 
insurance  companies  incorporated  in  this  state. 
Conflicting  laws  repealed. 

Sec.  19.  All  acts  and  parts  of  acts  in  conflict  with  this  act  are  hereby 
repealed. 

County  mutuals  are  corporations,  and  are  subject  to  the  insurance  tax  provided  by 
section  14,  article  13  of  the  constitution  :  Opinion  of  the  Attorney  General,  May  24, 
1911.  m     .    . 

While  county  mutuals  do  not  charge  regular  premiums,  in  lieu  thereof,  their  mem- 
bers are  assessed  to  meet  losses  as  well  as  sufficient  to  cover  expenses.  It  is  clearly  a 
method  of  collecting  sufficient  funds  to  carry  on  the  business  of  the  company,  and 
whether  the  payments  be  termed  premiums  or  assessments,  they  are  used  for  the 
same  purpose,  and  I  am,  therefore,  of  the  opinion  that  the  total  amount  received  by 
such  county  mutuals  should  be  considered  as  gross  premiums  and  deductions  should  be 
made  therefrom  in  accordance  with  the  constitutional  provisions:  Opinion  of  the 
Attorney  General,  Man  2>h  1911. 


102  INSURANCE  LAWS  OF  CALIFORNIA. 

An  act  providing  for  the  organization  and  management  of  mutual  fire  insurance 
corporations  and  associations  and  defining  the  same,  and  regulating  the 
transaction  of  the  business  of  mutual  fire  insurance  in  the  State  of  Cali- 
fornia, and  repealing  an  act  entitled  "An  act  providing  for  the  organization 
and  management  of  mutual  fire  insurance  companies"  approved  March  19, 
1907. 

[Approved  May  1,  1911,  Stats.  1911,  p.  1342.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Private  corporations  or  associations  may  be  formed  for  a 
term  to  be  stated  in  their  articles  not  exceeding  fifty  years  for  the  pur- 
pose of  insuring  the  property  of  their  members  against  loss  or  damage 
by  fire  in  accordance  with  this  act,  and  not  otherwise. 

Sec.  2.  The  trustees  or  directors  of  any  corporation  or  association 
shall  adopt  such  by-laws  not  in  conflict  with  the  laws  of  this  state,  as 
they  may  deem  proper  for  the  government  of  its  affairs  and  the  conduct 
of  its  business.  Such  by-laws  shall  provide  for  the  liability  of  its  mem- 
bers in  accordance  with  the  provisions  of  this  act. 

Sec.  3.  Each  person  or  partnership  or  corporation  accepting  a  policy 
in  any  such  mutual  insurance  corporation  or  association  shall  thereby 
become  a  member  of  such  corporation  or  association  and  shall  be  liable 
for  his  proportionate  share  of  losses  and  operating  expenses  as  herein- 
after provided. 

Sec.  4.  No  policy  shall  be  issued  by  any  such  corporation  or  asso- 
ciation until  not  less  than  five  hundred  thousand  (500,000)  dollars  of 
insurance  in  not  less  than  five  hundred  separate  risks  have  been  sub- 
scribed for  and  are  entered  upon  its  books,  nor  until  it  has  collected 
from  insurance  premiums,  and  then  has  on  hand  not  less  than  ten  thou- 
sand (10,000)  dollars  in  cash  over  and  above  all  liabilities  other  than 
reinsurance  reserve  as  specified  in  section  13  of  this  act,  and  also  con- 
tingent funds  consisting  of  the  liability  of  its  members  liable  to  assess- 
ment, in  addition  to  cash  premiums  collected,  amounting  to  not  less  than 
fifty  thousand  (50,000)  dollars,  such  liability  to  be  shown  in  the  signed 
applications  of  its  members. 

Sec.  5.  The  expenses  including  commissions  an^  fees  to  agents  and 
officers  of  any  calendar  year  of  any  such  corporation  or  association 
organized  or  operating  under  this  act  shall  be  limited  to  thirty  per  cent 
of  what  is  left  of  the  gross  premiums  actually  received  during  that  year 
after  deducting  from  such  premiums  the  return  premiums  and  reinsur- 
ance paid  out  by  or  for  which  the  corporation  or  association  has  become 
liable  during  the  year.  A  violation  of  this  provision  shall  render  the 
officers  and  directors  and  all  persons  having  similar  powers  jointly  and 
severally  liable  to  such  company  for  any  amount  used  for  expenses  in 
excess  of  the  amount  provided  for  in  this  section.  In  the  event  that 
such  company  fails  or  refuses  to  recover  such  moneys  so  paid  the  insur- 
ance commissioner  may  sue  for  and  recover  the  same  from  any  one  or  all 
of  the  officers  or  directors  and  all  persons  having  similar  powers  of  such 
company  for  the  benefit  of  its  policyholders.  No  officer  or  other  person 
whose  duty  it  is  to  determine  the  character  of  the  risks,  and  upon  whose 
decision  the  application  shall  be  accepted  or  rejected  by  such  corpora- 
tion shall  receive  as  any  part  of  his  compensation  a  commission  upon  the 
premiums,  but  his  compensation  shall  be  a  fixed  salary  and  such  share  of 
the  net  profits  as  the  directors,  and  all  persons  having  similar  powers 
may  determine. 


MUTUAL   FIRE   INSURANCE.  103 

Sec.  6.  Such  corporation  or  association  may  issue  policies  for  a  term 
not  exceeding  five  years;  provided,  the  term  of  any  policy  does  not 
exceed  the  time  limited  for  the  existence  of  the  charter  or  articles  of  asso- 
ciation. No  policy  or  policies  shall  be  for  an  amount  in  excess  of  twenty- 
five  hundred  (2500)  dollars  on  any  one  risk,  unless  protected  by  rein- 
surance in  companies  having  sufficient  assets  and  surplus  to  entitle  such 
companies  to  be  permitted  to  do  business  in  the  State  of  California ;  pro- 
vided, however,  that  one  thousand  (1000)  dollars  additional  insurance 
may  be  written  on  any  one  risk  for  each  million  dollars  of  total  insurance 
outstanding  on  the  books  of  the  corporation  or  association  in  excess  of 
one  million  dollars;  provided,  further,  that  two  or  more  buildings  sit- 
uated in  the  same  city  block,  or  separated  by  less  than  one  hundred  feet 
shall  be  deemed  to  be  one  risk. 

Sec.  7.  Any  mutual  fire  insurance  corporation  or  association  without 
subscribed  capital  or  guarantee  fund  organized  under  the  laws  of  some 
other  state  desiring  to  transact  business  in  this  state  shall  file  with  the 
insurance  commissioner  its  last  financial  statement,  showing  its  condi- 
tion on  December  thirty-first,  next  preceding  the  date  of  its  application 
for  admission,  signed  by  its  president  and  secretary  under  oath,  and 
showing  that  it  is  possessed  of  cash  assets  of  not  less  than  two  hun- 
dred thousand  (200,000)  dollars,  of  which  not  less  than  fifty  thousand 
(50,000)  dollars  shall  be  net  cash  surplus  over  and  above  all  liabilities, 
including  its  reinsurance  reserve  as  provided  in  section  13  of  this  act. 
Also  a  certificate  from  the  insurance  commissioner  of  the  state  in  which 
said  corporation  or  association  is  incorporated,  certifying  that  in  the 
judgment  of  the  state  insurance  commissioner  the  statement  is  correct 
and  that  the  corporation  or  association  is  possessed  of  two  hundred 
thousand  (200,000)  dollars  cash  assets,  of  which  not  less  than  fifty 
thousand  (50,000)  dollars  is  such  net  cash  surplus.  The  insurance  com- 
missioner of  this  state  upon  receipt  and  examination  of  such  statement 
and  certificate  and  upon  satisfying  himself  of  the  correctness  thereof 
and  of  compliance  with  the  law  of  this  state  applicable  as  shown  by  this 
act  shall  issue  to  such  corporation  or  association  a  certificate  of  authority 
granting  it  full  power  to  transact  business  under  this  act. 

Sec.  8.  Each  policyholder  shall  be  liable  to  pay  his  proportionate 
share  of  any  assessment  which  may  be  levied  by  any  such  corporation  or 
association  and  in  accordance  with  the  law  and  his  contract,  on  account- 
of  losses  and  expenses  incurred  while  he  is  a  member.  Any  such  cor- 
poration or  association  shall  charge  and  collect  upon  its  policies  the  full 
premium  in  cash,  and  may  in  its  by-laws,  fix  the  liability  of  its  members 
for  the  payment  of  the  losses  and  expenses  not  provided  for  by  its  cash 
funds ;  provided,  that  the  liability  of  a  member  to  assessment  shall  not  be 
less  than  the  amount  of  one  annual  premium  in  addition  to  the  annual 
cash  premium  of  his  policy;  provided,  however,  that  corporations  or 
associations  which  have  accumulated  in  the  regular  course  of  the  busi- 
ness, cash  assets  of  not  less  than  two  hundred  thousand  (200,000)  dol- 
lars of  which  not  less  than  fifty  thousand  (50,000)  dollars  is  net  cash 
surplus  over  and  above  all  the  requirements  of  section  13  of  this  act  shall 
have  power,  while  in  that  condition,  to  adopt  by-laws  limiting  the  lia- 
bility of  its  policyholders  for  loss  or  damage  by  fire  to  any  amount  it 
may  desire  to  specify  in  its  policies,  and  the  power  to  issue  policies  with 
such  limitation  of  liability  to  continue  only  during  the  time  such  corpora- 


104  INSURANCE  LAWS  OF  CALIFORNIA. 

tion  or  association  is  in  such  financial  condition ;  provided,  further,  that 
every  such  corporation  or  association  must  print  upon  its  policies  such 
by-laws  or  mutual  conditions  as  will  define  the  liability  of  a  policyholder. 

Sec.  9.  Whenever  such  corporation  or  association  is  not  possessed  of 
cash  funds  above  its  reinsurance  reserve  fund  and  all  other  liabilities 
sufficient  for  the  payment  of  accrued  losses  it  shall  make  an  assessment 
for  the  amount  needed  to  pay  such  losses  and  expenses,  upon  its  mem- 
bers liable  to  assessment  therefor  in  proportion  to  their  several  lia- 
bilities. The  corporation  or  association  shall  cause  to  be  recorded  in  a 
book  kept  for  that  purpose  the  order  of  such  assessment,  together  with 
a  statement  which  shall  set  forth  the  condition  of  the  corporation  or 
association  at  the  date  of  the  order,  the  amount  of  its  cash  assets  and 
contingent  funds  liable  to  assessment  and  the  amount  of  the  assessment 
called  for.  Such  record  shall  be  made  and  signed  by  the  directors  or 
other  persons  who  voted  for  the  order,  before  any  part  of  the  assessment 
is  collected,  and  any  person  liable  to  assessment  may  inspect  and  take 
a  copy  of  the  same. 

Sec.  10.  Any  member  of  any  such  corporation  or  association  may 
withdraw  at  any  time  by  surrendering  his  policy  or  certificate  of  insur- 
ance to  the  corporation  or  association  and  giving  thirty  days'  written 
notice  of  his  intention  to  withdraw  and  by  paying  his  share  of  all  losses 
which  shall  have  accrued  by  the  end  of  the  time  specified  in  the  notice, 
and  of  all  losses  arising  out  of  fires  occurring  theretofore  and  all  losses 
occurring  within  thirty  days  after  the  service  of  such  notice  and  all 
assessments  levied  in  whole  or  in  part  to  meet  such  losses,  and  all  assess- 
ments due,  accrued  or  pending  at  the  time  of  the  cancellation  of  his 
policy,  but  the  corporation  or  association  may  retain  the  customary  short 
rate  for  the  expired  time ;  provided,  also,  that  the  corporation  shall  have 
power  to  cancel  or  determine  any  policy  by  giving  the  insured  five 
days'  written  notice  to  that  effect,  and  returning  to  the  insured  his  pro 
rata  of  the  unearned  premium. 

Sec.  11.  No  corporation  or  association  formed  under  this  act  may 
make  any  dividend  except  from  profits  in  hand  after  retaining  unim- 
paired, a  cash  surplus  of  fifty  thousand  (50,000)  dollars  over  and 
above  all  liabilities  including  reinsurance  reserve  and  shall  thereafter 
retain  not  less  than  five  per-  cent  per  annum  of  all  profits  available  for 
•dividends  until  the  sum  of  two  hundred  thousand  dollars  ($200,000.00) 
net  cash  surplus  has  been  accumulated.  Such  cash  surplus  shall  be 
invested  in  the  manner  provided  for  in  subdivisions  1,  2,  3  and  4  of 
section  421  of  the  Civil  Code  of  the  State  of  California  as  that  section 
was  amended  by  act  approved  March  22,  1907. 

Sec.  12.  Any  corporation  or  association  organized  or  operating 
under  this  act  shall  file  with  the  insurance  commissioner  on  or  before 
the  first  day  of  March  of  each  year,  its  financial  statement  exhibiting 
its  condition  on  the  thirty-first  day  of  December  next  preceding.  Such 
statement  shall  be  made  as  provided  for  in  the  blanks  furnished  by  the 
insurance  department. 

Sec.  13.  Whenever  the  liabilities  of  any  corporation  or  association 
operating  under  this  act  for  losses  reported,  expenses,  taxes,  reinsurance 
reserve  upon  all  unexpired  fire  risks  running  one  year  or  less  from  date 
of  policy  at  fifty  (50)  per  cent,  and  upon  all  unexpired  fire  risks  running 
more  than  one  year  from  date  of  policy  to  be  estimated  pro  rata,  are 


LIVE    STOCK   INSURANCE.  105 

greater  than  its  admitted  cash  assets,  or  whenever  the  available  resources 
of  any  company  are  less  than  the  requirements  under  section  4  of  this 
act,  then  such  company  or  association  is  insolvent. 

Sec.  14.  The  general  provisions  applicable  to  all  corporations  as 
expressed  in  part  four,  division  first  of  the  Civil  Code  of  the  State  of 
California  and  all  provisions  contained  in  sections  595,  596,  596a,  597, 
598,  599,  603,  604,  605,  606,  607,  608,  609,  610,  611,  612,  615,  616,  617, 
618,  619,  620,  621,  622,  623,  627,  631,  631a,  632,  633,  634a,  634&  of  the 
Political  Code  of  the  State  of  California,  and  sections  435  and  439  of 
the  Penal  Code  of  the  State  of  California,  and  section  388  of  the  Code 
of  Civil  Procedure  of  the  State  of  California,  also  section  415  of  the 
Civil  Code  of  the  State  of  California,  and  all  other  laws  of  the  state 
relating  to  fire  insurance,  in  so  far  as  any  section  or  law  herein  referred 
to  is  not  inconsistent  with  or  in  conflict  with  the  provisions  of  this  act, 
are  hereby  made  to  apply  to  all  corporations  or  associations  operating 
under  this  act ;  provided,  nothing  herein  shall  relieve  such  corporations 
or  associations  from  full  compliance  with  the  provisions  of  section  14  of 
article  XIII  of  the  constitution  of  the  State  of  California  and  of  all 
statutes  enacted  in  aid  thereof. 

Sec.  15.  This  act  shall  not  apply  to  contracts  made  between  persons, 
firms  or  corporations,  of  this  state,  and  others  of  this  state  and  other 
states  for  the  protection  of  their  own  property  under  the  plan  known 
as  reciprocal  or  interinsurance,  nor  to  unincorporated  inter-indemnity 
compacts. 

Sec.  16.  Nothing  in  this  act  shall  be  construed  to  restrict  or  affect 
the  provisions  of  an  "Act  to  provide  for  the  organization  and  manage- 
ment of  county  fire  insurance  companies,"  approved  April  1,  1897. 

Sec.  17.  That  certain  act  of  the  legislature  of  the  State  of  Cali- 
fornia, entitled  "An  act  providing  for  the  organization  and  manage- 
ment of  mutual  fire  insurance  companies"  (approved  March  19,  1907) 
is  hereby  repealed. 

An  act  relating  to  life,  health  and  accident  insurance  of  live  stock  on  the  assess- 
ment plan  and  the  conduct  of  the  business  of  such  insurance. 

[Approved  March  23,  1907;  Stats.  1907,  p.  952.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Contract  of  mutual  insurance  of  animals  defined. 

Section  1.  Every  contract  whereby  a  benefit  may  accrue  to  a  party 
or  parties  therein  named  upon  the  death  or  physical  disability  of  an 
animal  insured  thereunder,  or  for  the  payment  of  any  sums  of  money 
dependent  in  any  degree  upon  the  collection  of  assessments  or  dues 
from  owners  holding  similar  contracts,  shall  be  deemed  a  contract  of 
mutual  insurance  upon  the  assessment  plan.  Such  contracts  must 
show  that  the  liabilities  of  the  insured  thereunder  are  not  limited  to 
fixed  premiums. 

How    corporations    may    be    formed — Investments— Condition    precedent    to 

issuing  insurance. 

Sec.  2.     Corporations  may  be  formed  under  the  general  laws  of  this 

state  to  carry  on  the  business  of  mutual  live  stock  insurance  upon  the 

assessment  plan,  and  shall  be  subject  only  to  the  provisions  of  this  act. 


106  INSURANCE  LAWS  OF  CALIFORNIA. 

No  such  corporation  shall  issue  contracts  of  insurance  until  at  least  two 
hundred  (200)  persons  owning  live  stock  have  applied,  in  writing,  for 
membership  or  insurance  therein,  and  have  paid  to  the  treasurer  of  such 
corporation  the  sum  of  five  thousand  (5000)  dollars.  This  sum  shall 
be  invested  in  bonds  or  securities,  approved  by  the  insurance  commis- 
sioner of  this  state,  or  deposited  in  some  bank  in  this  state  wrhere  it  will 
earn  interest.  Said  bonds  or  securities  or  evidences  of  such  deposit, 
shall  be  placed,  through  the  insurance  commissioner  of  this  state,  with 
the  state  treasurer,  and  the  principal  sum  shall  be  held  in  trust  for  the 
contract  holders  of  such  corporation,  with  the  right  in  the  corporation 
to  exchange  said  bonds,  securities,  or  evidence  of  bank  deposit  for  others 
of  like  value.  Such  corporations  shall  also,  as  a  condition  precedent  to 
issuing  any  contracts  of  insurance,  obtain  the  written  certificate  of  the 
insurance  commissioner  that  it  has  complied  with  the  requirements  of 
this  act ;  and  that  the  name  of  the  corporation  is  not  the  same  as  that  of 
any  other  corporation  of  this  or  other  states,  as  indicated  by  the  insur- 
ance department  reports  in  his  office ;  nor  shall  the  commissioner  approve 
any  name  or  title  so  closely  resembling  another  as  to  mislead  the  public. 
No  corporation  formed  hereunder  shall  have  legal  existence  after  one 
year  from  the  date  of  its  articles,  unless  its  organization  has  been  com- 
pleted, and  business  commenced ;  nor  shall  any  corporation  or  individual 
solicit,  or  cause  to  be  solicited,  any  business,  until  such  corporation  shall 
have  complied  with  the  provisions  of  section  633  of  the  Political  Code 
of  this  state. 
What  contracts  of  insurance  shall  specify. 

Sec.  3.  The  contracts  of  insurance  issued  by  such  corporation  shall 
specify  the  sum  or  sums  to  be  paid  upon  the  happening  of  the  contin- 
gency insured  against,  and  when  such  payments  will  be  made.  Unless 
the  contract  shall  have  been  invalidated  by  fraud  or  by  breach  of  its 
conditions,  the  corporation  shall  be  obligated  to  pay  the  beneficiary  the 
amount  or  amounts  specified  in  its  contract  at  the  time  or  times  therein 
named,  and  such  indebtedness  shall  be  a  lien  upon  all  the  property  of 
such  corporation,  with  priority  over  all  indebtedness  thereafter  incurred, 
except  as  hereinafter  provided  in  case  of  insolvency.  Failure  to  make 
such  payment  within  thirty  days  after  notice,  at  the  home  office,  by  mail, 
as  provided  by  law,  of  final  judgment,  unless  waiver  is  made  by  the 
beneficiary,  shall  constitute  a  forfeiture  of  the  right  to  do  business. 

Reserve  fund  required. 

Sec.  4.  Every  domestic  corporation  organized  or  doing  business 
under  this  act  shall  accumulate  a  reserve  or  emergency  fund,  which 
shall  at  all  times  be  not  less  than  the  largest  benefit  contracted  to  be 
paid  by  it  to  any  one  person.  Every  existing  domestic  corporation  must 
accumulate  such  fund  within  one  year  from  the  date  when  this  act  takes 
effect,  and  any  corporation  organized  hereunder  within  one  year  from 
the  date  of  its  certificate  of  incorporation.  Such  fund,  to  the  extent  of 
the  largest  amount  contracted  to  be  paid  by  any  such  corporation  to  any 
one  person,  shall  be  so  invested  and  deposited,  as  provided  in  section  two 
hereof,  with  the  right  in  the  corporation  to  exchange  any  such  securities 
for  others  of  equal  value.  The  deposit  required  by  section  two  of  this 
act  shall  constitute  a  part  of  the  reserve  required  by  this  section,  at  the 
option  of  such  corporation.  When  any  corporation  doing  business  here- 
under shall  discontinue  business,  this  fund  shall  be  returned  to  such 


LIVE   STOCK   INSURANCE.  107 

corporation,  or  so  disposed  of  as  may  be  determined  by  the  superior 
court  of  the  county,  or  city  and  county,  in  which  is  its  principal  place 
of  business. 

Foreign  corporations,  conditions  required. 

Sec.  5.  Corporations  organized  under  the  laws  of  any  other  state  or 
country  to  transact  the  business  of  mutual  assessment  or  live  stock 
insurance,  must,  as  a  condition  precedent  to  transacting  business  in  this 
state,  deposit  with  the  insurance  commissioner  of  this  state  a  certified 
copy  of  its  charter,  or  other  instrument,  required  by  its  home  author- 
ities ;  a  statement,  under  oath,  of  its  president  or  secretary,  of  its  busi- 
ness for  the  preceding  year,  in  such  form  as  may  be  required  by  the 
insurance  commissioner  of  this  state;  an  appointment  of  a  general 
agent,  service  upon  whom  shall  bind  the  corporation;  a  certificate  that 
for  the  next  preceding  twelve  months  it  has  paid,  in  full,  the  maximum 
amount  named  in  its  contracts  of  insurance;  a  certificate  from  the 
proper  officer  of  its  state  or  government  that  like  corporations  of  this 
state  are  legally  entitled  to  do  business  in  such  state  or  country ;  copies 
of  its  contracts  of  insurance  and  applications,  which  must  show  that  the 
liabilities  of  its  members  are  not  limited  to  fixed  premiums;  and  evi- 
dence, satisfactory  to  the  insurance  commissioner,  that  the  corporation 
has  accumulated  a  fund  equal  to  that  required  of  like  corporations  in 
this  state  constituting  a  reserve  or  surplus  fund  held  in  trust  for  the 
benefit  of  its  contract  holders,  and  so  invested  and  held  as  required  by 
the  laws  of  the  state  or  government  under  which  such  corporation  was 
organized.  The  insurance  commissioner  shall  thereupon  issue  a  license 
to  such  corporation  to  do  business  in  this  state.  This  license  must  be 
renewed  annually,  and  may  be  revoked  whenever  it  is  ascertained  that 
the  statements  required  to  be  made  by  this  section  are  not  true.  Upon 
such  revocation,  notice  thereof  shall  be  given  by  the  insurance  commis- 
sioner, by  publication  in  some  newspaper  published  in  the  city  and 
county  of  San  Francisco,  for  two  weeks,  daily,  and  no  new  contracts 
shall  be  made  by  such  company  in  this  state.  When  any  other  state  or 
country  imposes  any  additional  license,  fees,  taxes,  or  penalties  upon 
any  corporation  organized  or  doing  business  under  this  act,  like  license, 
fees,  taxes,  or  penalties  shall  be  imposed  upon  corporations  of  the  same 
kind,  and  their  agents,  of  such  state  or  country  doing  business  in  this 
state. 

Limitations  of  contract — Applications  for  insurance — Penalty  for  false  state- 
ments. 
Sec.  6.  No  corporation  doing  business  under  this  act  (except  acci- 
dent or  casualty  corporations)  shall  issue  a  contract  of  insurance  upon 
the  life  of  any  animal  after  it  has  passed  its  fifteenth  birthday.  Every 
such  contract  of  insurance  shall  be  founded  upon  written  application 
therefor,  and  (except  when  the  application  is  for  health,  accident,  or 
casualty  insurance  only,  or  for  one  hundred  dollars  life  insurance,  or 
less)  such  application  shall  be  accompanied  by  the  report  of  a  reputable 
veterinarian,  containing  a  detailed  statement  of  his  examination  of  the 
animal,  and  showing  the  animal  to  be  in  good  health,  and  recommend- 
ing the  issuance  of  a  contract  of  insurance.  Any  solicitor,  agent, 
employee,  examining  veterinarian,  or  other  person  making  a  false  or 
fraudulent  statement  to  any  corporation  doing  business  under  this  act, 
with  reference  to  any  application  for  insurance,  or  for  the  purpose  of 


108  INSURANCE  LAWS  OF  CALIFORNIA. 

obtaining  any  money  or  benefit  from  such  corporation,  shall  be  guilty  of 
a  misdemeanor,  and  upon  conviction  shall  be  punished  by  a  fine  of  not 
less  than  one  hundred  dollars  nor  more  than  five  hundred  dollars,  or  by 
imprisonment  in  the  county  jail  for  not  less  than  thirty  days  nor  more 
than  one  year,  or  by  both  such  fine  and  imprisonment,  in  the  discretion 
of  the  court ;  and  any  person  who  shall  make  a  false  statement  of  any 
material  fact  or  thing  in  a  sworn  statement  as  to  the  death  or  disability 
of  an  animal  of  the  contract  holder  in  any  such  corporation,  for  the  pur- 
pose of  procuring  or  aiding  the  beneficiary  or  beneficiaries,  or  contract 
holder,  in  procuring  the  payment  of  a  benefit  named  in  the  contract, 
shall  be  guilty  of  perjury,  and  may  be  proceeded  against  and  punished 
as  provided  by  the  statutes  of  this  state  in  relation  to  the  crime  of 
perjury. 

Benefits  not  liable  to  attachment. 

Sec.  7.  The  money,  benefit,  annuities,  endowment,  charity,  relief,  or 
aid  to  be  paid  as  provided  by  the  contracts  issued  by  any  corporation 
doing  business  under  this  act,  shall  not  be  liable  to  attachment  or  other 
process,  and  shall  not  be  seized,  taken,  appropriated,  or  applied  by  any 
legal  or  equitable  process,  nor  by  operation  of  law,  to  pay  any  debts  or 
liability  of  the  contract  holder,  or  any  beneficiary  named  thereunder. 
Annual  statement  to  be  filed. 

Sec.  8.  Every  domestic  and  foreign  corporation  doing  business 
under  this  act,  shall  annually,  on  or  before  the  first  day  of  February, 
file  with  the  insurance  commissioner,  in  such  form  as  he  shall  prescribe, 
a  statement  of  its  affairs  for  the  year  ending  on  the  preceding  thirty- 
first  day  of  December.  The  insurance  commissioner,  in  person  or  by 
duly  authorized  deputy,  shall  have  the  power  of  examination  into  the 
affairs  of  any  domestic  corporation  doing  business  or  claiming  to  do 
business  under  this  act,  at  any  time,  in  his  discretion,  and  shall  make 
such  examination  at  least  once  a  year. 

When  corporation  may  have  license  revoked. 

Sec.  9.  If  the  insurance  commissioner,  after  examination  of  the 
affairs  of  a  corporation,  shall  find  that  such  corporation  is  not  doing  its 
business  in  conformity  to  this  act,  or  that  it  is  doing  a  fraudulent  or 
unlawful  business,  or  that  it  is  not  carrying  out  its  terms  of  contract,  or 
that  it  can  not  within  three  months  from  the  date  of  notice  of  default 
pay  its  obligations,  he  shall  cite  the  president,  secretary,  manager,  or 
general  agent  of  said  corporation,  or  all  of  them,  to  appear  before  him 
(stating  the  time  and  place)  to  show  cause  why  the  authority  of  such 
corporation  to  do  business  shall  not  be  revoked ;  and  if  they  can  not 
show  cause,  then  he  shall  report  the  facts  to  the  attorney  general  of  this 
state,  who  shall  commence  proceedings  in  the  proper  court  to  restrain 
said  corporation  from  doing  any  further  business. 

Assessments,  notice  of  to  be  mailed. 

Sec.  10.  No  policy  or  certificate  issued  by  any  corporation  or  asso- 
ciation doing  business  under  the  provisions  of  this  act  shall  lapse  or  be 
lapsed  for  the  non-payment  of  any  assessment,  dues,  or  premiums,  unless 
the  corporation  or  association  has  first  mailed  to  the  insured  under  such 
policy  or  certificate,  at  his  or  her  last  given  post  office  address,  a  notice 
setting  forth  the  amount  to  be  paid,  and  the  time  the  same  is  due  and 
payable ;  and  such  notice  shall  be  mailed  at  least  fifteen  days  before  the 


FRATERNAL   BENEFIT    SOCIETIES.  109 

assessment  is  due  (provided  that  such  corporations  doing  business  under 
this  act  as  collect  specific  amounts  at  specific  dates,  as  contained  in  the 
contract,  shall  not  be  compelled  to  send  such  notices),  and  an  affidavit 
made  by  the  officer,  bookkeeper,  or  clerk  of  any  such  corporation  having 
charge  of  the  mailing  of  notices,  setting  forth  the  facts  as  they  appear 
on  the  records  in  the  office  of  the  said  corporation,  showing  that  such 
notice  was  mailed  and  the  date  of  mailing,  shall  constitute  conclusive 
evidence  of  the  mailing  of  such  notice. 

Fees  for  filing  statements,  etc. 

SeC.  12.  The  fees  for  filing  statements,  certificates,  or  other  docu- 
ments required  by  this  act,  or  for  any  service  or  act  of  the  insurance 
commissioner,  and  the  penalties  for  any  violation  of  this  act,  shall,  except 
as  otherwise  provided  herein,  be  the  same  as  provided  in  the  laws  of  this 
state  relating  to  life  insurance  companies,  and  shall  be  disposed  of  as 
provided  by  such  law. 

Expenses  of  insurance  commissioner,  how  paid. 

Sec.  13.  And  for  all  lawful  expenses  under  this  act,  or  by  reason  of 
any  of  its  provisions,  in  the  prosecution  of  any  suit  or  proceedings,  or 
otherwise,  for  the  enforcement  of  the  provisions  of  this  act,  the  insur- 
ance commissioner  must  present  bills  duly  certified  by  him,  and  accom- 
panied with  vouchers,  to  the  state  board  of  examiners,  who  must  allow 
the  same,  and  direct  payment  thereof  to  be  made;  and  the  state 
controller  shall  draw  warrants  therefor  on  the  state  treasurer  for  the 
payment  of  the  same  to  the  insurance  commissioner,  in  addition  to  the 
ordinary  contingent  expenses,  which  warrant  shall  be  payable  out  of  the 
general  fund. 

Time  act  shall  take  effect. 

Sec.  14.     This  act  shall  take  effect  immediately. 

An  act  for  the  regulation  and  control  of  fraternal  benefit  societies. 
[Approved  May  1,  1911;  Stats.  1911,  p.  1320.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Fraternal  benefit  societies  defined.  Any  corporation, 
society,  order  or  voluntary  association,  without  capital  stock,  organized 
and  carried  on  solely  for  the  mutual  benefit  of  its  members  and  their 
beneficiaries,  and  not  for  profit,  and  having  a  lodge  system  with  ritual- 
istic form  of  work  and  representative  form  of  government,  and  which 
shall  make  provision  for  the  payment  of  benefits  in  accordance  with 
section  5  hereof,  is  hereby  declared  to  be  a  fraternal  benefit  society. 

Sec.  2.  Lodge  system  defined.  Any  society  having  a  supreme  gov- 
erning or  legislative  body  and  subordinate  lodges  or  branches  by  what- 
ever name  known,  into  which  members  shall  be  elected,  initiated  and 
admitted  in  accordance  with  its  constitution,  laws,  rules,  regulations, 
and  prescribed  ritualistic  ceremonies,  which  subordinate  lodges  or 
branches  shall  be  required  by  the  laws  of  such  society  to  hold  regular  or 
stated  meetings  at  least  once  in  each  month,  shall  be  deemed  to  be 
operating  on  the  lodge  system. 

Sec.  3.  Representative  form  of  government  defined.  Any  such 
societv  shall  be  deemed  to  have  a  representative  form  of  government 


110  INSURANCE  LAWS  OF  CALIFORNIA. 

when  it  shall  provide  in  its  constitution  and  laws  for  a  supreme  legisla- 
tive or  governing  body,  composed  of  representatives  elected  either  by 
the  members  or  by  delegates  elected  directly  or  indirectly  by  the  mem- 
bers, together  with  such  other  members  as  may  be  prescribed  by  its  con- 
stitution and  laws ;  provided,  that  the  elective  members  shall  constitute 
a  majority  in  number  and  have  not  less  than  two  thirds  of  the  votes,  nor 
less  than  the  votes  required  to  amend  its  constitution  and  laws;  and 
provided,  further,  that  the  meetings  of  the  supreme  or  governing  body, 
and  the  election  of  officers,  representatives  or  delegates  shall  be  held  as 
often  as  once  in  four  years.  The  members,  officers,  representatives  or 
delegates  of  a  fraternal  benefit  society  shall  not  vote  by  proxy. 

Sec.  4.  Exemptions.  Except  as  herein  provided,  such  societies  shall 
be  governed  by  this  act  and  shall  be  exempt  from  all  provisions  of  the 
insurance  laws  of  this  state,  not  only  in  governmental  relations  with  the 
state,  but  for  every  other  purpose,  and  no  law  hereafter  enacted  shall 
apply  to  them,  unless  they  be  expressly  designated  therein. 

Sec.  5.  Benefits.  Subsection  1.  Every  society  transacting  busi- 
ness under  this  act  shall  provide  for  the  payment  of  death  benefits,  and 
may  provide  for  the  payment  of  benefits  in  case  of  temporary  or  perma- 
nent physical  disability,  either  as  the  result  of  disease,  accident  or  old 
age ;  provided,  the  period  of  life  at  which  the  payment  of  benefits  for  dis- 
ability on  account  of  old  age  shall  commence,  shall  not  be  under  seventy 
years,  and  may  provide  for  monuments  or  tombstones  to  the  memory 
of  its  deceased  members  and  for  the  payment  of  funeral  benefits.  Such 
society  shall  have  the  power  to  give  a  member,  when  permanently 
disabled  or  on  attaining  the  age  of  seventy,  all  or  such  portion  of  the 
face  value  of  his  certificate  as  the  laws  of  the  society  may  provide ;  pro- 
vided, that  nothing  in  this  act  contained  shall  be  so  construed  as  to 
prevent  the  issuing  of  benefit  certificates  for  a  term  of  years  less  than 
the  whole  of  life  which  are  payable  upon  the  death  or  disability  of  the 
member  occurring  within  the  term  for  which  the  benefit  certificate  may 
be  issued.  Such  society  shall,  upon  written  application  of  the  member, 
have  the  power  to  accept  a  part  of  the  periodical  contributions  in  cash, 
and  charge  the  remainder,  not  exceeding  one  half  of  the  periodical  con- 
tribution, against  the  certificate  with  interest  payable  or  compounded 
annually  at  a  rate  not  lower  than  four  per  cent  per  annum;  provided, 
that  this  privilege  shall  not  be  granted  except  to  societies  which  have 
readjusted  or  may  hereafter  readjust  their  rates  of  contributions  and 
to  contracts  affected  by  such  readjustment. 

Subsection  2.  Any  society  which  shall  show  by  the  annual  valuation 
hereinafter  provided  for  that  it  is  accumulating  and  maintaining  the 
reserve  necessary  to  enable  it  to  do  so,  under  a  table  of  mortality  not 
lower  than  the  American  Experience  Table  and  four  per  cent  interest 
may  grant  to  its  members,  extended  and  paid-up  protection  or  such 
withdrawal  equities  as  its  constitution  and  laws  may  provide ;  provided, 
that  such  grants  shall  in  no  case  exceed  in  value  the  portion  of  the 
reserve  to  the  credit  of  such  members  to  whom  they  are  made. 

Sec.  6.  Beneficiaries.  The  payment  of  death  benefits  shall  be  con- 
fined to  wife,  husband,  relative  by  blood  to  the  fourth  degree,  father-in- 
law,  mother-in-law,  son-in-law,  daughter-in-law,  stepfather,  stepmother, 
stepchildren,  children  by  legal  adoption,  or  to  a  person  or  persons 
dependent  upon  the  member ;  provided,  that  if  after  the  issuance  of  the 


FRATERNAL   BENEFIT    SOCIETIES.  Ill 

original  certificate  the  member  shall  become  dependent  upon  an  incor- 
porated charitable  institution,  he  shall  have  the  privilege  with  the  con- 
sent of  the  society,  to  make  such  institution  his  beneficiary.  Within  the 
above  restrictions  each  member  shall  have  the  right  to  designate  his  bene- 
ficiary, and,  from  time  to  time,  have  the  same  changed  in  accordance 
with  the  laws,  rules  or  regulations  of  the  society,  and  no  beneficiary 
shall  have  or  obtain  any  vested  interest  in  the  said  benefit  until  the 
same  has  become  due  and  payable  upon  the  death  of  the  said  member ; 
provided,  that  any  society  may,  by  its  laws,  limit  the  scope  of  beneficiaries 
within  the  above  classes. 

Sec.  7.  Qualifications  for  membership.  Any  society  may  admit  to 
beneficial  membership  any  person  not  less  than  sixteen  and  not  more 
than  sixty  years  of  age,  who  has  been  examined  by  a  legally  qualified 
physician  and  whose  examination  has  been  supervised  and  approved  in 
accordance  with  the  laws  of  the  society ;  provided,  that  any  beneficiary 
member  of  such  society  who  shall  apply  for  a  certificate  providing  for 
disability  benefits,  need  not  be  required  to  pass  an  additional  medical 
examination  therefor.  Nothing  herein  contained  shall  prevent  such 
society  from  accepting  general  or  social  members. 

Sec.  8.  Certificate.  Every  certificate  issued  by  any  such  society 
shall  specify  the  amount  of  benefit  provided  thereby,  and  shall  provide 
that  the  certificate,  the  charter  or  articles  of  incorporation,  or,  if  a  vol- 
untary association,  the  articles  of  association,  the  constitution  and  laws 
of  the  society  and  the  application  for  membership  and  medical  examina- 
tion, signed  by  the  applicant,  and  all  amendments  to  each  thereof,  shall 
constitute  the  agreement  between  the  society  and  the  member,  and  copies 
of  the  same  certified  by  the  secretary  of  the  society,  or  corresponding 
officer,  shall  be  received  in  evidence  of  the  terms  and  conditions  thereof 
and  any  changes,  additions  or  amendments  to  said  charter  or  articles  of 
incorporation,  or  articles  of  association,  if  a  voluntary  association,  con- 
stitution or  laws  duly  made  or  enacted  subsequent  to  the  issuance  of  the 
benefit  certificate  shall  bind  the  member  and  his  beneficiaries,  and  shall 
govern  and  control  the  agreement  in  all  respects  the  same  as  though 
such  changes,  additions  or  amendments  had  been  made  prior  to  and  were 
in  force  at  the  time  of  the  application  for  membership. 

Sec.  9.  Funds.  Subsection  1.  Any  society  may  create,  maintain, 
invest,  disburse  and  apply  an  emergency,  surplus  or  other  similar  fund 
in  accordance  with  its  laws.  Unless  otherwise  provided  in  the  contract, 
such  funds  shall  be  held,  invested,  and  disbursed  for  the  use  and  benefit 
of  the  society,  and  no  member  or  beneficiary  shall  have  or  acquire  indi- 
vidual rights  therein  or  become  entitled  to  any  apportionment  or  the 
surrender  of  any  part  thereof,  except  as  provided  in  subsection  2  of 
section  5  of  this  act.  The  funds  from  which  benefits  shall  be  paid  and 
the  funds  from  which  the  expenses  of  the  society  shall  be  defrayed,  shall 
be  derived  from  periodical  or  other  payments  by  the  members  of  the 
society  and  accretions  of  said  funds ;  provided,  that  no  society,  domestic 
or  foreign,  shall  hereafter  be  incorporated  or  admitted  to  transact  busi- 
ness in  this  state,  which  does  not  provide  for  stated  periodical  contribu- 
tions sufficient  to  provide  for  meeting  the  mortuary  obligations  con- 
tracted, when  valued  upon  the  basis  of  the  National  Fraternal  Congress 
Table  of  Mortality  as  adopted  by  the  National  Fraternal  Congress, 
August  23,  1899,  or  any  higher  standard  with  interest  assumption  not 


112  INSURANCE  LAWS  OF  CALIFORNIA. 

more  than  four  per  cent  per  annum,  nor  write  or  accept  members  for 
temporary  or  permanent  disability  benefits  except  upon  tables  based 
upon  reliable  experience,  with  an  interest  assumption  not  higher  than 
four  per  cent  per  annum. 

Subsection  2.  Deferred  payments  or  installments  of  claims  shall  be 
considered  as  fixed  liabilities  on  the  happening  of  the  contingency  upon 
which  such  payments  or  installments  are  thereafter  to  be  paid.  Such 
liability  shall  be  the  present  value  of  such  future  payments  or  install- 
ments upon  the  rate  of  interest  and  mortality  assumed  by  the  society 
for  valuation,  and  every  society  shall  maintain  a  fund  sufficient  to  meet 
such  liability  regardless  of  proposed  future  collections  to  meet  any  such 
liabilities. 

Sec.  10.  Investments.  Every  society  shall  invest  its  funds  only  in 
securities  permitted  by  the  laws  of  this  state  for  the  investment  of  the 
assets  of  life  insurance  companies;  provided,  that  any  foreign  society 
permitted  or  seeking  to  do  business  in  this  state,  which  invests  its  funds 
in  accordance  with  the  laws  of  the  state  in  which  it  is  incorporated,  shall 
be  held  to  meet  the  requirements  of  this  act  for  the  investment  of  funds. 

Sec.  11.  Distribution  of  funds.  Every  provision  of  the  laws  of  the 
society  for  payment  by  members  of  such  society,  in  whatever  form 
made,  shall  distinctly  state  the  purpose  of  the  same  and  the  proportion 
thereof  which  may  be  used  for  expenses,  and  no  part  of  the  money  col- 
lected for  mortuary  or  disability  purposes  or  the  net  accretions  of  either 
or  any  of  said  funds  shall  be  used  for  expenses. 

Sec.  12.  Organization.  Seven  or  more  persons,  citizens  of  the 
United  States,  and  a  majority  of  whom  are  citizens  of  this  state,  who 
desire  to  form  a  fraternal  benefit  society,  as  defined  by  this  act,  may 
make  and  sign  (giving  their  addresses)  and  acknowledging  before  some 
officer  competent  to  take  acknowledgment  of  deeds,  articles  of  incorpo- 
ration, in  which  shall  be  stated : 

First — The  proposed  corporate  name  of  the  society,  which  shall  not 
so  closely  resemble  the  name  of  any  society  or  insurance  company  already 
transacting  business  in  this  state  as  to  mislead  the  public  or  to  lead  to 
confusion. 

Second — The  purpose  for  which  it  is  formed — which  shall  not  include 
more  liberal  powers  than  are  granted  by  this  act;  provided,  that  any 
lawful  social,  intellectual,  educational,  charitable,  benevolent,  moral  or 
religions  advantages  may  be  set  forth  among  the  purposes  of  the  society 
— and  the  mode  in  which  its  corporate  powers  are  to  be  exercised. 

Third — The  names,  residences  and  official  titles  of  all  the  officers, 
trustees,  directors  or  other  persons  who  are  to  have  and  exercise  the  gen- 
eral control  and  management  of  the  affairs  and  funds  of  the  society  for 
the  first  year  or  until  the  ensuing  election  at  which  all  such  officers  shall 
be  elected  by  the  supreme  legislative  or  governing  body  which  election 
shall  be  held  not  later  than  one  year  from  the  date  of  the  issuance  of  the 
permanent  certificate. 

Such  articles  of  incorporation  and  duly  certified  copies  of  the  consti- 
tution and  laws,  rules  and  regulations,  and  copies  of  all  proposed  forms 
of  benefit  certificates,  applications  therefor  and  circulars  to  be  issued  by 
such  society,  and  a  bond  in  the  sum  of  five  thousand  dollars,  with  sureties 
approved  by  the  insurance  commissioner  conditioned  upon  the  return  of 
the  advanced  payments,  as  provided  in  this  section,  to  applicants,  if  the 


FRATERNAL   BENEFIT    SOCIETIES.  113 

organization  is  not  completed  within  one  year,  shall  be  filed  with  the 
insurance  commissioner,  who  may  require  such  further  information  as 
he  deems  necessary,  and  if  the  purposes  of  the  society  conform  to  the 
requirements  of  this  act,  and  all  provisions  of  law  have  been  complied 
with  the  insurance  commissioner,  shall  so  certify  and  retain  and  file  the 
articles  of  incorporation,  and  furnish  the  incorporators  a  preliminary 
certificate  authorizing  said  society  to  solicit  members  as  hereinafter  pro- 
vided. Upon  receipt  of  said  certificate  from  the  insurance  commissioner 
said  society  may  solicit  members  for  the  purpose  of  completing  its  organ- 
ization and  shall  collect  from  each  applicant  the  amount  of  not  less  than 
one  regular  monthly  payment,  in  accordance  with  its  table  of  rates  as 
provided  by  its  constitution  and  laws,  and  shall  issue  to  each  such  appli- 
cant a  receipt  for  the  amount  so  collected.  But  no  such  society  shall 
incur  any  liability  other  than  for  such  advanced  payments,  nor  issue  any 
benefit  certificate  nor  pay  or  allow,  or  offer  or  promise  to  pay  or  allow, 
to  any  person  any  death  or  disability  benefit  until  actual  bona  fide  appli- 
cations for  death  benefit  certificates  have  been  secured  upon  at  least  five 
hundred  lives  for  at  least  one  thousand  dollars  each,  and  all  such  appli- 
cants for  death  benefits  shall  have  been  regularly  examined  by  legally 
qualified  practicing  physicians,  and  certificates  of  such  examinations 
have  been  duly  filed  and  approved  by  the  chief  medical  examiner  of  such 
society,  nor  until  there  shall  be  established  ten  subordinate  lodges  or 
branches  into  which  said  five  hundred  applicants  have  been  initiated, 
nor  until  there  has  been  submitted  to  the  insurance  commissioner,  under 
oath  of  the  president  and  secretary,  or  corresponding  officers  of  such 
society,  a  list  of  such  applicants,  giving  their  names,  addresses,  date 
examined,  date  approved,  date  initiated^  name  and  number  of  the  subor- 
dinate branch  of  which  each  applicant  is  a  member,  amount  of  benefits 
to  be  granted,  rate  of  stated  periodical  contributions  which  shall  be  suffi- 
cient to  provide  for  meeting  the  mortuary  obligation,  contracted,  when 
valued  for  death  benefits  upon  the  basis  of  the  National  Fraternal  Con- 
gress Table  of  Mortality,  as  adopted  by  the  National  Fraternal  Congress 
August  23,  1899,  or  any  higher  standard  at  the  option  of  the  society, 
and  for  disability  benefits  by  tables  based  upon  reliable  experience  and 
for  combined  death  and  permanent  total  disability  benefits  by  tables 
based  upon  reliable  experience,  with  an  interest  assumption  not  higher 
than  four  per  cent  per  annum,  nor  until  it  shall  be  shown  to  the  insur- 
ance commissioner  by  the  sworn  statement  of  the  treasurer,  or  corre- 
sponding officer  of  such  society,  that  at  least  five  hundred  applicants 
have  each  paid  in  cash  at  least  one  regular  monthly  payment  as  herein 
provided  per  one  thousand  dollars  of  indemnity  to  be  affected,  which 
payments  in  the  aggregate  shall  amount  to  at  least  twenty-five  hundred 
dollars,  all  of  which  shall  be  credited  to  the  mortuary  or  disability  fund 
on  account  of  such  applicants,  and  no  part  of  which  may  be  used  for 
expenses.  Said  advanced  payments  shall,  during  the  period  of  organiza- 
tion be  held  in  trust,  and,  if  the  organization  is  not  completed  within  one 
year  as  hereinafter  provided,  returned  to  said  applicants.  The  insur- 
ance commissioner  may  make  such  examination  and  require  such  further 
information  as  he  deems  advisable,  and  upon  presentation  of  satisfac- 
tory evidence  that  the  society  has  complied  with  all  the  provisions  of  law 
he  shall  issue  to  such  society  a  certificate  to  that  effect.  Such  certificate 
shall  be  prima  facie  evidence  of  the  existence  of  such  society  at  the  date 
8— IN 


114  INSURANCE  LAWS  OF  CALIFORNIA. 

of  such  certificate.  The  insurance  commissioner  shall  cause  a  record  of 
such  certificate  to  be  made  and  a  certified  copy  of  such  record  may  be 
given  in  evidence  with  like  effect  as  the  original  certificate.  No  prelim- 
inary certificates  granted  under  the  provisions  of  this  section  shall  be 
valid  after  one  year  from  its  date,  or  after  such  further  period,  not 
exceeding  one  year,  as  may  be  authorized  by  the  insurance  commissioner 
upon  cause  shown,  unless  the  five  hundred  applicants  herein  required 
have  been  secured  and  the  organization  has  been  completed  as  herein 
provided,  and  the  articles  of  incorporation  and  all  proceedings  there- 
under shall  become  null  and  void  in  one  year  from  the  date  of  said  pre- 
liminary certificate,  or  at  the  expiration  of  said  extended  period,  unless 
such  society  shall  have  completed  its  organization  and  commenced  busi- 
ness as  herein  provided.  When  any  domestic  society  shall  have  dis- 
continued business  for  the  period  of  one  year,  or  has  less  than  four 
hundred  members,  its  charter  shall  become  null  and  void.  Every  such 
society  shall  have  the  power  to  make  a  constitution  and  by-laws  for  the 
government  of  the  society,  the  admission  of  its  members,  the  manage- 
ment of  its  affairs  and  the  fixing  and  readjusting  of  the  rates  of  con- 
tribution of  its  members  from  time  to  time ;  and  it  shall  have  the  power 
to  change,  alter,  add  to  or  amend  such  constitution  and  by-laws  and  shall 
have  such  other  powers  as  are  necessary  and  incidental  to  carrying  into 
effect  the  objects  and  purposes  of  the  society. 

Sec.  13.  Powers  retained;  reincorporation;  amendments,  Any  so- 
ciety now  engaged  in  transacting  business  in  this  state  may  exercise, 
after  the  passage  of  this  act,  all  of  the  rights  conferred  thereby,  and  all 
of  the  rights,  powers  and  privileges  now  exercised  or  possessed  by  it 
under  its  charter  or  articles  of  incorporation  not  inconsistent  with  this 
act,  if  incorporated ;  or,  if  it  be  a  voluntary  association,  it  may  incorpo- 
rate hereunder.  But  no  society  already  organized  shall  be  required  to 
reincorporate  hereunder,  and  any  such  society  may  amend  its  articles  of 
incorporation  from  time  to  time  in  the  manner  provided  therein  or  in 
its  constitution  and  laws  and  all  such  amendments  shall  be  filed  with  the 
insurance  commissioner,  and  shall  become  operative  upon  such  filing, 
unless  a  later  time  be  provided  in  such  amendments  or  in  its  articles  of 
incorporation,  constitution  or  laws. 

Sec.  14.  Mergers  and  transfers.  No  domestic  society  shall  merge 
with  -or  accept  the  transfer  of  the  membership  or  funds  of  any  other 
society  unless  such  merger  or  transfer  is  evidenced  by  a  contract  in 
writing,  setting  out  in  full  the  terms  and  conditions  of  such  merger  or 
transfer,  and  filed  with  the  insurance  commissioner  of  this  state,  together 
with  a  sworn  statement  of  the  financial  condition  of  each  of  said  societies, 
by  its  president  and  secretary,  or  corresponding  officers,  and  a  certificate 
of  such  officers,  duly  verified  under  oath  of  said  officers  of  each  of  the 
contracting  societies,  that  such  merger  or  transfer  has  been  approved 
by  a  vote  of  two  thirds  of  the  members  of  the  supreme  legislative  or 
governing  body  of  each  of  said  societies.  Upon  the  submission  of  said 
contract,  financial  statements  and  certificates,  the  insurance  commis- 
sioner shall  examine  the  same,  and,  if  he  shall  find  such  financial  state- 
ments to  be  correct  and  the  said  contract  to  be  in  conformity  with  the 
provisions  of  this  section,  and  that  such  merger  or  transfer  is  just  and 
equitable  to  the  members  of  each  of  said  societies,  he  shall  approve 
said  merger  or  transfer,  issue  his  certificate  to  that  effect  and  thereupon 


FRATERNAL   BENEFIT    SOCIETIES.  115 

the  said  contract  of  merger  or  transfer  shall  be  of  full  force  and  effect. 
In  case  such  contract  is  not  approved,  the  fact  of  its  submission  and  its 
contents  shall  not  be  disclosed  by  the  insurance  commisioner. 

Sec.  15.  Annual  license.  Societies  which  are  now  authorized  to 
transact  business  in  this  state  may  continue  such  business  until  the  first 
day  of  July  next  succeeding  the  passage  of  this  act,  and  the  authority 
of  such  societies  may  thereafter  be  renewed  annually,  but  in  all  cases 
to  terminate  on  the  first  day  of  the  succeeding  July ;  provided,  however, 
the  certificate  of  authority  shall  continue  in  full  force  and  effect  until 
the  new  certificate  o"f  authority  be  issued  or  specifically  refused.  For 
each  such  certificate  of  authority  or  renewal  the  society  shall  pay  the 
insurance  commisioner  ten  dollars.  A  duly  certified  copy  or  duplicate 
of  such  certificate  of  authority  shall  be  prima  facie  evidence  that  the 
licensee  is  a  fraternal  benefit  society  within  the  meaning  of  this  act. 

Sec.  16.  Admission  of  foreign  society.  No  foreign  society  now 
transacting  business,  organized  prior  to  the  passage  of  this  act,  which  is 
not  now  authorized  to  transact  business  in  this  state,  shall  transact  any 
business  herein  without  a  certificate  of  authority  from  the  insurance 
commisioner.  Any  such  society  shall  be  entitled  to  a  certificate  of 
authority  to  transact  business  within  this  state  upon  filing  with  the 
insurance  commissioner  a  duly  certified  copy  of  its  charter  or  articles 
of  association;  a  copy  of  its  constitution  and  laws,  certified  by  its  sec- 
retary or  corresponding  officer,  a  power  of  attorney  to  the  insurance 
commissioner  as  hereinafter  provided ;  a  statement  of  its  business  under 
oath  of  its  president  and  secretary,  or  corresponding  officers,  in  the  form 
required  by  the  insurance  commissioner,  duly  verified  by  an  examination 
made  by  the  supervising  insurance  official  of  its  home  state  or  other 
state  satisfactory  to  the  insurance  commissioner  of  this  state ;  a  certificate 
from  the  proper  official  in  its  home  state,  province  or  country  that  the 
society  is  legally  organized;  a  copy  of  its  contract,  which  must  show 
that  benefits  are  provided  for  by  periodical,  or  other  payments  by,  per- 
sons holding  similar  contracts,  and  upon  furnishing  the  insurance  com- 
missioner such  other  information  as  he  may  deem  necessary  to  a  proper 
exhibit  of  its  business  and  plan  of  working  and  upon  showing  that  its 
assets  are  invested  in  accordance  with  the  laws  of  the  state,  territory, 
district,  province  or  country  where  it  is  organized,  he  shall  issue  a  cer- 
tificate of  authority  to  such  society  to  do  business  in  this  state  until  the 
first  day  of  the  succeeding  July  and  such  certificate  of  authority  shall, 
upon  compliance  with  the  provisions  of  this  act,  be  renewed  annually, 
but  in  all  cases  to  terminate  on  the  first  day  of  the  succeeding  July; 
provided,  however,  that  certificate  of  authority  shall  continue  in  full 
force  and  effect  until  the  new  certificate  of  authority  be  issued  or 
specifically  refused.  Any  foreign  society  desiring  admission  to  this  state 
shall  have  the  qualifications  required  of  domestic  societies  organized 
under  this  act  and  have  its  assets  invested  as  required  by  the  laws  of  the 
state,  territory,  district,  country,  or  province  where  it  is  organized. 
For  each  such  certificate  or  renewal  the  society  shall  pay  the  insurance 
commissioner  twenty  dollars.  When  the  insurance  commissioner  refuses 
to  issue  a  certificate  of  authority  to  any  society,  or  revokes  its  certificate 
of  authority  to  do  business  in  this  state,  he  shall  reduce  his  ruling,  order 
or  decision  to  writing  and  file  the  same  in  his  office,  and  shall  furnish 
a  copy  thereof,  together  with  a  statement  of  his  reasons,  to  the  officers 


116  INSURANCE  LAWS  OF  CALIFORNIA. 

of  the  society,  upon  request,  and  the  action  of  the  insurance  commis- 
sioner shall  be  reviewable  by  proper  proceedings  in  any  court  of  com- 
petent jurisdiction  within  the  state;  provided,  however,  that  nothing 
contained  in  this  or  the  preceding  section  shall  be  taken  or  construed  as 
preventing  any  such  society  from  continuing  in  good  faith  all  contracts 
made  in  this  state  during  the  time  such  society  was  legally  authorized 
to  transact  business  herein. 

Sec.  17.  Power  of  attorney  and  service  of  process.  Every  society, 
whether  domestic  or  foreign,  now  transacting  business  in  this  state  shall, 
within  thirty  days  after  the  passage  of  this  act,  and  every  such  society 
hereafter  applying  for  admission,  shall,  before  being  licensed,  appoint 
in  writing  the  insurance  commissioner  and  his  successors  in  office  to  be 
its  true  and  lawful  attorney,  upon  whom  all  legal  process  in  any  action 
or  proceeding  against  it  shall  be  served,  and  in  such  writing  shall  agree 
that  any  lawful  process  against  it  which  is  served  upon  such  attorney 
shall  be  of  the  same  legal  force  and  validity  as  if  served  upon  the  society 
and  that  the  authority  shall  continue  in  force  so  long  as  any  liability 
remains  outstanding  in  this  state.  Copies  of  such  appointment,  certified 
by  said  insurance  commissioner  shall  be  deemed  sufficient  evidence 
thereof  and  shall  be  admitted  in  evidence  with  the  same  force  and  effect 
as  the  original  thereof  might  be  admitted.  Service  shall  only  be  made 
upon  such  attorney,  must  be  made  in  duplicate  upon  the  insurance  com- 
missioner or  in  his  absence  upon  the  person  in  charge  of  his  office  and 
shall  be  deemed  sufficient  service  upon  such  society ;  provided,  however, 
that  no  such  service  shall  be  valid  or  binding  against  any  such  society 
when  it  is  required  thereunder  to  file  its  answer,  pleading  or  defense  in 
less  than  thirty  days  from  the  date  of  mailing  the  copy  of  such  service 
to  such  society.  When  legal  process  against  any  such  society  is  served 
upon  said  insurance  commissioner  he  shall  forthwith  forward  by  regis- 
tered mail  one  of  the  duplicate  copies  prepaid  and  directed  to  its  secre- 
tary or  corresponding  officer.  Legal  process  shall  not  be  served  upon 
any  such  society  except  in  the  manner  provided  herein. 

Sec.  18.  Place  of  meeting;  location  of  office.  Any  domestic  society 
may  provide  that  the  meetings  of  its  legislative  or  governing  body  may 
be  held  in  any  state,  district,  province  or  territory  wherein  such  society 
has  subordinate  branches  and  all  business  transacted  at  such  meetings 
shall  be  as  valid  in  all  respects  as  if  such  meetings  were  held  in  this 
state.    But  its  principal  office  shall  be  located  in  this  state. 

Sec.  19.  No  personal  liability.  Officers  and  members  of  the  supreme, 
grand  or  any  subordinate  body  of  any  such  incorporated  society  shall 
not  be  individually  liable  for  the  payment  of  any  disability  or  death 
benefit  provided  for  in  the  laws  and  agreements  of  such  society,  but  the 
same  shall  be  payable  only  out  of  the  funds  of  such  society  and  in  the 
manner  provided  by  its  laws. 

Sec.  20.  Waiver  of  the  provisions  of  the  laws.  The  constitution  and 
laws  of  the  society  may  provide  that  no  subordinate  body,  nor  any  of 
its  subordinate  officers  or  members  shall  have  the  power  or  authority  to 
waive  any  of  the  provisions  of  laws  and  constitution  of  the  society,  and 
the  same  shall  be  binding  on  the  society  and  each  and  every  member 
thereof  and  on  all  beneficiaries  of  members. 

Sec.  21.  Benefits  not  attachable.  No  money  or  other  benefit,  charity 
or  relief  or  aid  to  be  paid,  provided  or  rendered  by  any  such  society 


FRATERNAL   BENEFIT   SOCIETIES.  117 

shall  be  liable  to  attachment,  garnishment  or  other  process,  or  be  seized, 
taken,  appropriated  or  applied  by  any  legal  or  equitable  process  or 
operation  of  law  to  pay  any  debt  or  liability  of  a  member  or  beneficiary, 
or  any  other  person  who  may  have  a  right  thereunder,  either  before  or 
after  payment. 

Sec.  22.  Constitution  and  laws;  amendment.  Every  society  trans- 
acting business  under  this  act  shall  file  with  the  insurance  commissioner 
a  duly  certified  copy  of  all  amendments  of  or  additions  to  its  constitu- 
tion and  laws  within  ninety  days  after  the  enactment  of  the  same. 
Printed  copies  of  the  constitution  and  laws  as  amended,  changed  or 
added  to,  certified  by  the  secretary  or  corresponding  officer  of  the 
society  shall  be  prima  facie  evidence  of  the  legal  adoption  thereof. 

Sec.  23.  Annual  reports.  Every  society  transacting  business  in  this 
state  shall  annually,  on  or  before  the  first  day  of  March,  file  with  the 
insurance  commissioner  in  such  form  as  he  may  require,  a  statement 
under  oath  of  its  president  and  secretary  or  corresponding  officers,  of  its 
condition  and  standing  on  the  thirty-first  day  of  December  next  pre- 
ceding, and  of  its  transactions  for  the  year  ending  on  that  date  and  also 
shall  furnish  such  other  information  as  the  insurance  commissioner  may 
deem  necessary  to  a  proper  exhibit  of  its  business  and  plan  of  working. 
The  insurance  commissioner  may  at  other  times  require  any  further 
statement  he  may  deem  necessary  to  be  made  relating  to  such  society. 
In  addition  to  the  annual  report  herein  required,  each  society  shall 
annually  report  to  the  insurance  commissioner  a  valuation  of  its  certifi- 
cates in  force  on  December  31st,  last  preceding,  excluding  those  issued 
within  the  year  for  which  the  report  is  filed,  in  cases  where  the  contribu- 
tions for  the  first  year  in  whole  or  in  part  are  used  for  current  mortality 
and  expenses ;  provided,  the  first  report  of  valuation  shall  be  made  as  of 
December  31st,  1912.  Such  report  of  valuation  shall  show,  as  contingent 
liabilities,  the  present  mid-year  value  of  the  promised  benefits  provided 
in  the  constitution  and  laws  of  such  society  under  certificates  then  sub- 
ject to  valuation ;  and,  as  contingent  assets,  the  present  mid-year  value 
of  the  future  net  contributions  provided  in  the  constitution  and  laws  as 
the  same  are  in  practice  actually  collected.  At  the  option  of  any  society, 
in  lieu  of  the  above,  the  valuation  may  show  the  net  value  of  the  certifi- 
cates subject  to  valuation  hereinbefore  provided  and  said  net  value, 
when  computed  in  case  of  monthly  contributions  may  be  the  mean  of  the 
terminal  values  for  the  end  of  the  preceding  and  of  the  current  insur- 
ance years.  Such  valuation  shall  be  certified  by  a  competent  account- 
ant or  actuary,  or  at  the  request  and  expense  of  the  society,  verified  by 
the  actuary  of  the  department  of  insurance  of  the  home  state  of  the 
society,  and  shall  be  filed  with  the  insurance  commissioner  within  ninety 
days  after  the  submission  of  the  last  preceding  annual  report.  The 
legal  minimum  standard  of  valuation  for  all  certificates,  except  for  dis- 
ability benefits,  shall  be  the  National  Fraternal  Congress  Table  of  Mor- 
tality as  adopted  by  the  National  Faternal  Congress  August  23, 1899,  or 
at  the  option  of  the  society,  any  higher  table,  or,  at  its  option,  it  may  use 
a  table  based  upon  the  society 's  own  experience  of  at  least  twenty  years 
and  covering  not  less  than  one  hundred  thousand  lives  with  interest 
assumption  not  more  than  four  per  centum  per  annum.  Each  such 
valuation  report  shall  set  forth  clearly  and  fully  the  mortality  and 
interest  basis  and  the  method  of  valuation.    Any  society  providing  for 


118  INSURANCE  LAWS  OF  CALIFORNIA. 

disability  benefits  shall  keep  the  net  contributions  for  such  benefits  in  a 
fund  separate  and  apart  from  all  other  benefit  and  expense  funds  and 
the  valuation  of  all  other  business  of  the  society ;  provided,  that  where 
a  combined  contribution  table  is  used  by  a  society  for  both  death  and 
permanent  total  disability  benefits,  the  valuation  shall  be  according  to 
tables  of  reliable  experience  and  in  such  case  a  separation  of  the  funds 
shall  not  be  required.  The  valuation  herein  provided  for  shall  not  be 
considered  or  regarded  as  a  test  of  the  financial  solvency  of  the  society, 
but  each  society  shall  be  held  to  be  legally  solvent  so  long  as  the  funds 
in  its  possession  are  equal  to  or  in  excess  of  its  matured  liabilities. 
Beginning  with  the  year  1914  a  report  of  such  valuation  and  an  explana- 
tion of  the  facts  concerning  the  condition  of  the  society  thereby  dis- 
closed shall  be  printed  and  mailed  to  each  beneficiary  member  of  the 
society  not  later  than  June  1st  of  each  year,  or,  in  lieu  thereof,  such 
report  of  valuation  and  showing  of  the  society 's  condition  as  thereby  dis- 
closed may  be  published  in  the  society 's  official  paper  and  the  issue  con- 
taining the  same  mailed  to  each  beneficiary  member  of  the  society.  The 
laws  of  such  society  shall  provide  that  if  the  stated  periodical  contribu- 
tions of  the  members  are  insufficient  to  pay  all  matured  death  and  dis- 
ability claims  in  full  and  to  provide  for  the  creation  and  maintenance 
of  the  funds  required  by  its  laws  additional,  increased  or  extra  rates  of 
contribution  shall  be  collected  from  the  members  to  meet  such  defi- 
ciency ;  and  such  laws  may  provide  that,  upon  the  written  application  or 
consent  of  the  member,  his  certificate  may  be  charged  with  its  propor- 
tion of  any  deficiency  disclosed  by  valuation,  with  interest  not  exceeding 
five  per  centum  per  annum. 

Sec.  23a.  Provisions  to  insure  future  security.  If  the  valuation  of 
the  certificates,  as  hereinbefore  provided,  on  December  31st,  1917,  shall 
show  that  the  present  value  of  future  net  contributions,  together  with 
the  admitted  assets,  is  less  than  ninety  per  centum  of  the  present  value 
of  the  promised  benefits  and  accrued  liabilities,  such  society  shall  be 
required  thereafter  to  reduce  such  deficiency  not  less  than  five  per 
centum  of  the  total  deficiency  on  said  December  31st,  1917,  at  each  suc- 
ceeding triennial  valuation.  If  at  any  succeeding  triennial  valuation 
such  society  does  not  show  such  percentage  of  improvement,  the  insur- 
ance commissioner  shall  direct  that  it  thereafter  comply  with  the  require- 
ments herein  specified.  If  the  next  succeeding  triennial  valuation  after 
the  receipt  of  such  notice  shall  show  that  the  society  has  not  made  the 
percentage  of  improvement  required  herein,  the  insurance  commis- 
sioner may,  in  the  absence  of  good  cause  shown  for  such  failure,  insti- 
tute proceedings  for  the  dissolution  of  such  society,  in  accordance  with 
the  provisions  of  section  24  of  this  act,  or,  in  the  case  of  a  foreign 
society,  he  may  cancel  its  certificate  of  authority  to  transact  business  in 
this  state.  Any  such  society,  shown  by  any  triennial  valuation,  subse- 
quent to  December  31,  1917,  not  to  have  made  the  improvements  herein 
required  shall,  within  one  year  thereafter,  complete  such  deficient  im- 
provements, or  thereafter,  as  to  all  new  members  admitted,  be  subject,  so 
far  as  stated  rates  of  contribution  are  concerned,  to  the  provisions  of  sec- 
tion 12  of  this  act,  applicable  in  the  organization  of  new  societies ;  pro- 
vided, that  the  contributions  and  funds  of  such  new  members  shall  be 
kept  separate  and  apart  from  the  other  funds  of  the  society  until  the 
required  improvement  shall  be  shown  by  valuation.     If  such  required 


FRATERNAL   BENEFIT    SOCIETIES.  119 

improvement  is  not  shown  by  the  succeeding  triennial  valuation,  then 
the  said  new  members  may  be  placed  in  a  separate  class  and  their  certifi- 
cates valued  as  an  independent  society  in  respect  of  contributions  and 
funds. 

Sec.  24.  Examination  of  domestic  societies.  The  insurance  com- 
missioner, or  any  person  he  may  appoint  shall  have  the  power  of  visita- 
tion and  examination  into  the  affairs  of  any  domestic  society.  He  may 
employ  assistants  for  the  purpose  of  such  examination,  and  he,  or  any 
person  he  may  appoint,  shall  have  free  access  to  all  the  books,  papers 
and  documents  that  relate  to  the  business  of  the  society  and  may  sum- 
mon and  qualify  as  witness  under  oath  and  examine  its  officers,  agents 
and  employees  or  other  persons  in  relation  to  the  affairs,  transactions 
and  conditions  of  the  society.  The  expense  of  such  examination  shall 
be  paid  by  the  society  examined,  upon  statement  furnished  by  the 
insurance  commissioner,  and  the  examination  shall  be  made  at  least  once 
in  three  years.  Whenever  after  examination  the  insurance  commissioner 
is  satisfied  that  any  domestic  society  has  failed  to  comply  with  any  pro- 
visions of  this  act,  or  is  exceeding  its  powers,  or  is  not  carrying  out  its 
contracts  in  good  faith,  or  is  transacting  business  fraudulently  or  when- 
ever any  domestic  society,  after  the  existence  of  one  year  or  more,  shall 
have  a  membership  of  less  than  four  hundred  (or  shall  determine  to 
discontinue  business),  the  insurance  commissioner  may  present  the  facts 
relating  thereto  to  the  attorney  general,  who  shall,  if  he  deem  the  cir- 
cumstances warrant,  commence  an  action  in  quo  warranto  in  a  court  of 
competent  jurisdiction,  and  such  court  shall  thereupon  notify  the  officers 
of  such  society  of  a  hearing,  and  it  shall  then  appear  that  such  society 
should  be  closed,  said  society  shall  be  enjoined  from  carrying  on  any 
further  business  and  some  person  shall  be  appointed  receiver  of  such 
society,  and  shall  proceed  at  once  to  take  possession  of  the  books,  papers, 
moneys  and  other  assets  of  the  society  and  shall  forthwith,  under  the 
direction  of  the  court,  proceed  to  close  the  affairs  of  the  society  and  to 
distribute  its  funds  to  those  entitled  thereto.  No  such  proceedings  shall 
be  commenced  by  the  attorney  general  against  any  such  society  until 
after  notice  has  been  duly  served  on  the  chief  executive  officers  of  the 
society  and  a  reasonable  opportunity  given  to  it,  on  a  date  to  be  named 
in  said  notice,  to  show  cause  why  such  proceedings  should  not  be  com- 
menced. 

Sec.  25.  Application  for  receiver,  etc.  No  application  for  injunc- 
tion against  or  proceedings  for  the  dissolution  of  or  the  appointment  of 
a  receiver  for  any  such  domestic  society  or  branch  thereof  shall  be 
entertained  by  any  court  in  this  state  unless  the  same  is  made  by  the 
attorney  general. 

Sec.  26.  Examination  of  foreign  societies.  The  insurance  commis- 
sioner or  any  person  whom  he  may  appoint,  may  examine  any  foreign 
society  transacting  or  applying  for  admission  to  transact  business  in  this 
state.  The  said  insurance  commissioner  may  employ  assistants,  and  he, 
or  any  person  he  may  appoint,  shall  have  free  access  to  all  the  books, 
papers  and  documents  that  relate  to  the  business  of  the  society,  and  may 
summon  and  qualify  as  witness  under  oath  and  examine  its  officers, 
agents  and  employees  and  other  persons  in  relation  to  the  affairs,  trans- 
actions and  condition  of  the  society.  He  may,  in  his  discretion,  accept 
in  lieu  of  such  examination  the  examination  of  the  insurance  depart- 


120  INSURANCE  LAWS  OF  CALIFORNIA. 

ment  of  the  state,  territory,  district,  province  or  country  where  such 
society  is  organized.  The  actual  expenses  of  examiners  making  any 
such  examination  shall  be  paid  by  the  society  upon  statement  furnished 
by  the  insurance  commissioner.  If  any  such  society  or  its  officers  refuse 
to  submit  to  such  examination  or  to  comply  with  the  provisions  of  the 
section  relative  thereto,  the  authority  of  such  society  to  write  new  busi- 
ness in  this  state  shall  be  suspended  or  license  refused  until  satisfactory 
evidence  is  furnished  the  insurance  commissioner  relating  to  the  con- 
dition and  affairs  of  the  society,  and  during  such  suspension  the  society 
shall  not  write  new  business  in  this  state. 

Sec.  27.  No  adverse  publication.  Pending,  during  or  after  an  exam- 
ination or  investigation  of  any  such  society,  either  domestic  or  foreign, 
the  insurance  commissioner  shall  make  public  no  financial  statement, 
report  or  finding,  nor  shall  he  permit  to  become  public  any  financial 
statement,  report  or  finding  affecting  the  status,  standing  or  rights  of 
any  such  society,  until  a  copy  thereof  shall  have  been  served  upon  such 
society,  at  its  home  office,  nor  until  such  society  shall  have  been  afforded 
a  reasonable  opportunity  to  answer  any  such  financial  statement,  report 
or  finding  and  to  make  such  showing  in  connection  therewith  as  it  may 
desire. 

Sec.  28.  Revocation  of  license.  When  the  insurance  commissioner 
on  investigation  is  satisfied  that  any  foreign  society  transacting  business 
under  this  act  has  exceeded  its  powers,  or  has  failed  to  comply  with  any 
provisions  of  this  act,  or  is  conducting  business  fraudulently,  or  is  not 
carrying  out  its  contracts  in  good  faith  he  shall  notify  the  society  of  his 
findings,  and  state  in  writing  the  grounds  of  his  dissatisfaction,  and 
after  reasonable  notice  require  said  society,  on  a  date  named,  to  show 
cause  why  its  license  should  not'  be  revoked.  If  on  the  date  named  in 
said  notice  such  objections  have  not  been  removed  to  the  satisfaction  of 
the  said  insurance  commissioner,  or  the  society  does  not  present  good 
and  sufficient  reasons  why  its  authority  to  transact  business  in  this 
state  should  not  at  that  time  be  revoked,  he  may  revoke  the  authority  of 
the  society  to  continue  business  in  this  state.  All  decisions  and  findings 
of  the  insurance  commissioner  made  under  the  provisions  of  this  section 
may  be  reviewed  by  proper  proceedings  in  any  court  of  competent  juris- 
diction, as  provided  in  section  16  of  this  act. 

Sec.  29.  Exemption  of  certain  societies.  Nothing  contained  in  this 
act  shall  be  construed  'to  affect  or  apply  to  grand  or  subordinate  lodges 
of  Masons,  Odd  Fellows  or  Knights  of  Pythias  (exclusive  of  the  insur- 
ance department  of  the  supreme  lodge  Knights  of  Pythias),  and  the 
Junior  Order  of  United  American  Mechanics  (exclusive  of  the  benefi- 
ciary degree  or  insurance  branch  of  the  national  council  Junior  Order 
United  American  Mechanics)  or  societies  which  limit  their  membership 
to  any  one  hazardous  occupation,  nor  to  similar  societies  which  do  not 
issue  insurance  certificates,  nor  to  an  association  of  local  lodges  of  a 
society  now  doing  business  in  this  state  which  provides  death  benefits 
not  exceeding  three  hundred  dollars  to  any  one  person,  or  disability 
benefits  not  exceeding  three  hundred  dollars  in  any  one  year  to  any  one 
person,  or  both,  nor  to  any  contracts  of  reinsurance  business  on  such 
plan  in  this  state,  nor  to  domestic  societies  which  limit  their  membership 
to  the  employees  of  a  particular  city  or  town,  designated  firm,  business 
house  or  corporation,  nor  to  domestic  lodges,  orders  or  associations  of  a 


FRATERNAL   BENEFIT   SOCIETIES.  121 

purely  religious,  charitable  and  benevolent  description,  which  do  not 
provide  for  a  death  benefit  of  more  than  one  hundred  dollars,  or  for 
disability  benefits  of  more  than  one  hundred  and  fifty  dollars  to  any  one 
person  in  any  one  year ;  provided,  always  that  any  such  domestic  order 
or  society  which  has  more  than  five  hundred  members,  and  provides  for 
death  or  disability  benefits,  and  any  such  domestic  lodge,  order  or  society 
which  issues  to  any  person  a  certificate  providing  for  the  payment  of 
benefits,  shall  not  be  exempt  by  the  provisions  of  this  section,  but  shall 
comply  with  all  the  requirements  of  this  act.  The  insurance  commis- 
sioner may  require  from  any  society  such  information  as  will  enable  him 
to  determine  whether  such  society  is  exempt  from  the  provisions  of  this 
act.  No  society,  which  is  exempt  by  the  provisions  of  this  section  from 
the  requirement  of  this  act  shall  give  or  allow  or  promise  to  give  or 
allow,  to  any  person  any  compensation  for  procuring  new  members. 
Any  fraternal  benefit  society,  heretofore  organized  and  incorporated 
and  operating  within  the  definition  set  forth  in  sections  1,  2  and  3,  of 
this  act,  providing  for  benefits  in  case  of  death  or  disability  resulting 
solely  from  accidents,  but  which  does  not  obligate  itself  to  pay  death  or 
sick  benefits,  may  be  licensed  under  the  provisions  of  this  act,  and  shall 
have  all  the  privileges  and  shall  be  subject  to  all  the  provisions  and 
regulations  of  this  act,  except  that  the  provisions  of  this  act  requiring 
medical  examinations,  valuations  of  benefit  certificates,  and  that  the  cer- 
tificate shall  specify  the  amount  of  benefits,  shall  not  apply  to  such 
society. 

Sec.  30.  Taxation.  Every  fraternal  benefit  society  organized  or 
licensed  under  this  act  is  hereby  declared  to  be  a  charitable  and  benev- 
olent institution,  and  all  of  its  funds  shall  be  exempt  from  all  and  every 
state,  county,  district,  municipal  and  school  tax,  other  than  taxes  on  real 
estate  and  office  equipment. 

Sec.  31.  Penalties.  Any  person,  officer,  member  or  examining  physi- 
cian of  any  society  authorized  to  do  business  under  this  act  who  shall 
knowiDgly  or  wilfully  make  any  false  or  fraudulent  statement  or  repre- 
sentation in  or  with  reference  to  any  application  for  membership,  or  for 
the  purpose  of  obtaining  money  from  or  benefit  in  any  society  trans- 
acting business  under  this  act,  shall  be  guilty  of  a  misdemeanor,  and 
upon  conviction  thereof  shall  be  punished  by  a  fine  of  not  less  than  one 
hundred  dollars  nor  more  than  five  hundred  dollars,  or  imprisonment  in 
the  county  jail  for  not  less  than  thirty  days  nor  more  than  one  year,  or 
both,  in  the  discretion  of  the  court ;  and  any  person  who  shall  wilfully 
make  a  false  statement  of  any  material  fact  or  thing  in  a  sworn  state- 
ment as  to  the  death  or  disability  of  a  certificate  holder  in  any  such 
society  for  the  purpose  of  procuring  payment  of  a  benefit  named  in  the 
certificate  of  such  holder,  and  any  person  who  shall  wilfully  make  any 
false  statement  in  any  verified  report  or  declaration  under  oath  required 
or  authorized  by  this  act,  shall  be  guilty  of  perjury,  and  shall  be  pro- 
ceeded against  and  punished  as  provided  by  the  statutes  of  this  state  in 
relation  to  the  crime  of  perjury.  Any  person  who  shall  solicit  member- 
ship for,  or  in  any  manner  assist  in  procuring  membership  in  any  fra- 
ternal benefit  society  not  licensed  to  do  business  in  this  state,  or  who 
shall  solicit  membership  for,  or  in  any  manner  assist  in  procuring  mem- 
bership in  any  such  society  not  authorized  as  herein  provided,  to  do 
business  as  herein  defined  in  this  state  shall  be  guilty  of  a  misdemeanor 
and  upon  conviction  thereof  shall  be  punished  by  a  fine  of  not  less  than 


122  INSURANCE  LAWS  OF  CALIFORNIA. 

fifty  nor  more  than  two  hundred  dollars.  Any  society,  or  any  officer, 
agent  or  employee  thereof  neglecting  or  refusing  to  comply  with,  or 
violatinb  any  of  the  provisions  of  this  act,  the  penalty  for  which  neglect, 
refusal  or  violation  is  not  specified  in  this  section,  shall  be  fined  not 
exceeding  two  hundred  dollars  upon  conviction  thereof. 

Sec.  32.     All  acts  and  parts  of  acts  inconsistent  with  this  act  are 
hereby  repealed. 


An  act  defining  certain  classes  of  contracts  for  the  exchange  of  indemnity,  pre- 
scribing regulations  therefor  and  fixing  a  license  fee. 

[Approved  May  1,  1911 ;  Stats.  1911,  p.  1279.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  Individuals,  partnerships  or  corporations  may  exchange 
reciprocal  or  interinsuranee  contracts  providing  indemnity  among  each 
other  from  loss  or  from  other  damages  in  accordance  with  the  following 
provisions  of  this  act ;  provided,  that  no  individual,  partnership  or  corpo- 
ration thus  exchanging  indemnity  shall  assume  on  any  single  risk  an 
amount  greater  than  ten  per  cent  of  the  net  financial  rating  of  such 
individual,  partnership  or  corporation ;  such  financial  rating  to  be  shown 
by  the  reports  of  a  commercial  agency  having  at  least  one  hundred  thou- 
sand members. 

Sec.  2.  Such  individuals,  partnerships  or  corporations  so  contract- 
ing among  themselves  shall  have  the  power  to  appoint  an  attorney,  agent 
or  other  representative  and  shall,  through  their  attorney,  agent  or  other 
representative,  file  with  the  insurance  commissioner  of  this  state  a  certifi- 
cate in  writing,  verified  by  the  oath  of  said  attorney,  agent  or  other  rep- 
resentative, setting  forth : 

(a)  The  name  or  title  by  which  said  individuals,  partnerships  or  cor- 
porations intending  to  make  such  contracts  shall  be  known.  The  insur- 
ance commissioner  may  rejeet  any  name  or  title  so  submitted  when  the 
same  is  an  interference  with  or  too  similar  to  one  already  appropriated 
or  likely  to  mislead  the  public  in  any  respect  and,  in  such  case,  a  name 
not  liable  to  such  objection  must  be  chosen. 

(b)  A  verified  copy  of  the  form  of  policy,  contract  or  agreement  under 
or  by  which  such  indemnity  is  to  be  exchanged. 

(c)  A  verified  copy  of  the  form  of  power  of  attorney  or  other  author- 
ity of  any  said  attorney,  agent  or  other  representative  setting  forth  the 
character  of  such  representation  and  the  authority  of  such  represen- 
tative. 

(d)  The  location  of  the  office  or  offices  through  which  said  policies, 
contracts  or  agreements  are  to  be  issued. 

(e)  Such  attorney  in  fact  shall  also  file  a  stipulation  or  agreement  in 
writing  that  any  notice,  provided  by  law  or  by  any  insurance  policy, 
proof  of  loss,  summons  or  other  process  may  be  served  upon  the  attorney 
in  fact  or  upon  the  insurance  commissioner  of  the  State  of  California, 
in  all  actions  or  in  other  legal  proceedings  against  such  individuals, 
partnerships  or  corporations  thus  exchanging  indemnity  under  the  pro- 
visions of  section  1  of  this  act.  All  notices,  proofs  of  loss,  summons 
or  other  legal  process  so  served  shall  give  jurisdiction  over  the  persons 
of  such  individuals,  partnerships  or  corporations  thus  exchanging  in- 
demnity.   Whenever  such  service  of  notice,  proofs  of  loss,  summons  or 


CONTRACTS   FOR  EXCHANGE   OP   INDEMNITY.  123 

other  process  shall  be  made  upon  the  insurance  commissioner,  he  must 
within  ten  days  thereafter,  transmit  by  mail,  postage  paid,  a  copy  of 
such  notice,  proof  of  loss,  or  summons  or  other  process  to  the  attorney 
in  fact  so  appointed  by  such  individuals,  partnerships  or  corporations  so 
contracting  among  themselves  and  shall  be  addressed  to  such  attorney  in 
fact  at  the  home  or  principal  office  through  which  such  policies  are  to 
be  issued.  The  sending  of  such  copy  by  the  insurance  commissioner 
shall  be  a  necessary  part  of  the  service  of  the  notice,  proof  of  loss,  sum- 
mons or  other  process.  When  any  notice,  summons  or  other  legal  process 
is  served  upon  the  insurance  commissioner  pursuant  to  the  provisions  of 
this  section,  the  service  as  to  such  individuals,  partnerships,  or  corpora- 
tions thus  exchanging  indemnity  shall  be  deemed  complete  at  the  end  of 
sixty  days  after  the  date  of  the  mailing  of  such  copy  of  such  notice, 
proof  of  loss,  summons  or  other  legal  process  to  the  attorney  in  fact  as 
herein  provided  for. 

(/)  The  attorney,  agent  or  other  representative  shall,  whenever  and 
as  often  as  the  same  shall  be  requested,  file  with  the  insurance  commis- 
sioner a  statement  verified  by  his  oath  to  the  effect  that  he  has  examined 
the  commercial  rating  of  the  individuals,  partnerships  or  corporations, 
composing  the  subscribers  in  such  reciprocal  or  interinsurance  exchange 
as  shown  by  a  commercial  agency  having  at  least  one  hundred  thou- 
sand subscribers  and  that,  from  such  examination,  it  appears  that  no 
subscriber  of  such  exchange  has  assumed  on  any  single  risk  an  amount 
of  liability  greater  than  ten  per  cent  of  the  net  financial  rating  of  such 
subscriber  when  such  risk  was  assumed. 

(g)  There  shall  also  be  filed  with  the  insurance  commissioner  by  any 
said  attorney,  agent  or  other  representative,  a  written  stipulation  to  the 
effect  that  all  insurance  written  by  him  upon  property  situated  within 
this  state  shall  be  deemed  to  be  business  done  in  this  state  and  within 
the  terms  and  subject  as  to  taxation  to  the  provisions  of  section  14  of 
article  13  of  the  constitution  of  this  state. 

Sec.  3.  The  agent,  attorney  or  other  representative  by  or  through 
whom  are  issued  or  negotiated  any  policies  of  or  contracts  or  agreements 
for  any  insurance  or  indemnity  of  the  character  referred  to  in  section 
one  of  this  act  shall  procure  from  the  insurance  commissioner  a  certifi- 
cate of  authority  stating  that  all  the  requirements  of  this  act  have  been 
complied  with  and  upon  such  compliance  and  the  payment  of  a  fee  of 
fifty  dollars  the  insurance  commissioner  shall  issue  such  certificate. 
Such  certificate  must  be  renewed  annually,  for  which  a  fee  of  ten  dollars 
shall  be  paid.  Any  such  certificate  so  issued  as  above  may  be  revoked  or 
suspended  by  the  insurance  commissioner  if  any  of  such  individuals, 
partnerships  or  corporations  exchanging  indemnity  under  the  provisions 
of  this  act  fail  to  comply  with  any  or  all  of  the  requirements  of  this  act. 

Sec.  4.  The  attorney  in  fact  of  such  individuals,  partnerships  or 
corporations  composing  such  reciprocal  or  interinsurance  exchange  shall 
file  with  the  insurance  commissioner  of  this  state,  on  or  before  the  first 
of  March  of  each  year,  upon  forms  to  be  prepared  by  the  insurance  com- 
missioner, a  statement  which  must  exhibit  the  condition  and  affairs  of 
such  exchange  on  the  31st  day  of  December  then  next  preceding. 

Sec.  5.  The  insurance  commissioner,  whenever  he  deems  necessary, 
must  make  an  examination  of  the  condition  and  affairs  relating  to  the 
exchange  of  indemnity  of  such  individuals,  partnerships  or  corporations 
composing  such  reciprocal  or  interinsurance  exchange  and  must  make 


124  INSURANCE  LAWS  OF  CALIFORNIA. 

such  an  examination  before  issuing  its  original  certificate  of  authority 
to  do  business  in  this  state ;  or  where  the  home  office  of  the  interinsur- 
ance  or  reciprocal  exchange  is  located  outside  of  the  State  of  California, 
and  when  such  interinsurance  or  reciprocal  exchange  is  licensed  by  the 
insurance  commissioner  or  department  of  the  state  where  such  home 
office  is  located,  the  insurance  commissioner  shall  accept  as  satisfactory 
a  certificate  of  compliance  issued  by  the  insurance  commissioner  or 
department  of  the  state  where  said  home  office  is  located.  Such  exam- 
ination shall  verify  the  certificate  and  statement  filed  by  the  attorney  in 
fact.  Such  exchange  must  open  its  books  and  papers  for  the  inspection 
of  the  insurance  commissioner  and  shall  otherwise  facilitate  such  exam- 
ination and  the  commissioner  may  administer  oaths  and  examine  under 
oath  any  person  relative  to  the  contracts  of  such  exchange,  and  if  he 
finds  the  books  to  have  been  carelessly  or  improperly  kept  or  posted  he 
must  employ  sworn  experts  to  rewrite,  post  and  balance  the  same  at  the 
expense  of  such  individuals,  partnerships  or  corporations  composing 
such  reciprocal  or  interinsurance  exchange.  Such  examination  must  be 
conducted  in  the  county  where  such  individuals,  partnerships  or  corpo- 
rations composing  such  reciprocal  or  interinsurance  exchange  has  its 
principal  office  and  must  be  private.  Whenever  the  commissioner  shall 
make  such  examination  as  aforesaid  the  same  must  be  at  the  expense  of 
the  individuals,  partnerships  and  corporations  composing  such  recip- 
rocal or  interinsurance  exchange;  such  expense  to  be  paid  in  advance, 
and  in  the  event  of  refusal  to  pay  such  expenses  the  insurance  commis- 
sioner may  refuse  to  issue  any  such  certificate  of  authority  and  must 
revoke  any  existing  certificate  of  authority  authorizing  such  individuals, 
partnerships  and  corporations  composing  such  reciprocal  or  interinsur- 
ance exchange  to  execute  such  contracts  of  indemnity. 

Sec.  6.  Unincorporated  interindemnity  companies  who  do  not  issue 
policies  of  insurance,  who  do  not  charge  expenses  of  management  except 
in  liquidation  of  losses,  nor  accept  premiums  from  its  members  shall  be 
exempt  from  the  provisions  of  this  act. 

Sec.  7.  All  policies  and  insurance  contracts  or  contracts  of  indem- 
nity upon  a  risk  or  risks  situated  in  the  State  of  California,  held  by  an 
individual,  partnership  or  corporations  as  a  subscriber  of  any  reciprocal 
or  interinsurance  exchange  which  exchange  is  not  authorized  to  do  busi- 
ness in  the  State  of  California  shall  be  null  and  void ;  provided,  that  any 
insurance  agreement  or  agreement  for  indemnity  on  goods  in  transit  or 
the  property  of  common  carriers  used  by  such  common  carriers  in  the 
transaction  of  their  business  as  such  carriers  shall  be  deemed  not  ren- 
dered void. 

Sec.  8.  For  the  purpose  of  taxation  under  the  provisions  of  section 
14  of  article  13  of  the  constitution  of  the  State  of  California  all  con- 
tracts of  indemnity  upon  risks  located  in  this  state  between  individuals, 
partnerships  and  corporations  under  the  provisions  of  this  act  shall  be 
deemed  to  be  contracts  of  insurance  upon  business  done  in  this  state 
under  and  subject  to  the  provisions  of  such  section  14  article  13  of  the 
constitution  of  the  State  of  California. 

Sec.  9.  Individuals,  partnerships  and  corporations  exchanging  recip- 
rocal or  interinsurance  contracts  providing  indemnity  among  each  other 
shall  be  exempt  from  the  provisions  of  other  insurance  laws  of  this  state. 

Sec.  10.     This  act  shall  take  effect  July  1,  1911. 


STANDARD   FORM    OF    FIRE   INSURANCE   POLICY.  125 

An  act  to  establish  a  standard  form  of  fire  insurance  policy  and  to  prevent  vari- 
ations therefrom,  excepting  under  certain  stated  conditions  and  restrictions. 

[Approved  March  18,  1909;  Stats.  1909,  p.  404.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Section  1.  The  following  is  adopted  as  a  standard  form  of  fire  insur- 
ance policy  for  the  State  of  California : 

CALIFORNIA  STANDARD  FORM  FIRE  INSURANCE  POLICY. 

No Amount  $ 

Rate 

No  other  insurance  permitted 
except  by  agreement  endorsed  hereon  or  added  hereto. 

(Here  insert  name  of  company,  and  place  of  its  main  office  in  Cali- 
fornia, and  name  of  state  or  country  under  which  incorporated  or 
organized.) 

IN  CONSIDERATION  of  the  stipulations  herein  named   and  of 

dollars  premium  does  insure for  the  term  of from 

the day  of ,  19 . . . . ,  at  noon,  to  the  day  of ,  19 . . . , 

at  noon  against  all  loss  or  damage  by  fire,  except  as  hereinafter  pro- 
vided. 

To  an  amount  not  exceeding dollars  to  the  following  described 

property  while  located  and  contained  as  described  herein,  and  not  else- 
where, to  wit : 


The  company  will  not  be  liable  beyond  the  actual  cash  value  of  the 
interest  of  the  insured  in  the  property  at  the  time  of  loss  or  damage  nor 
exceeding  what  it  would  then  cost  the  insured  to  repair  or  replace  the 
same  with  material  of  like  kind  and  quality;  said  cash  value  to  be  esti- 
mated without  allowance  for  any  increased  cost  of  repair  or  reconstruc- 
tion by  reason  of  any  ordinance  or  law  regulating  repair  or  construction 
of  buildings,  and  without  compensation  for  loss  resulting  from  interrup- 
tion of  business  or  manufacture. 

This  policy  is  made  and  accepted  subject  to  the  foregoing  stipulations 
and  conditions  and  those  hereinafter  stated,  which  are  hereby  specially 
referred  to,  and  made  part  of  this  policy,  together  with  such  other  pro- 
visions, agreements  or  conditions  as  may  be  endorsed  hereon  or  added 
hereto,  and  no  officer,  agent,  or  other  representative  of  this  company 
shall  have  power  to  waive  any  provision  or  condition  of  this  policy 
except  by  writing  endorsed  hereon  or  added  hereto,  and  no  person,  unless 
duly  authorized  in  writing,  shall  be  deemed  the  agent  of  this  company. 

This  policy  shall  not  be  valid  until  countersigned  by  the  duly  author- 
ized agent  of  the  company,  at 

In  witness  whereof,  this  company  has  executed  and  attested  these 
presents  (here  insert  name  of  company) 
by { 

Countersigned  at ,  this day  of ,  19 .  .  . 

;  Agent. 


126  INSURANCE  LAWS  OF  CALIFORNIA. 

STIPULATIONS  AND   CONDITIONS  SPECIALLY  REFERRED  TO. 

Property  not  covered,  (a)  This  company  shall  not  be  liable  for  loss 
to  accounts,  bills,  currency,  evidences  of  debt  or  ownership  or  other 
documents,  money,  notes  or  securities;  nor,  (6)  unless  liability  is  specif- 
ically assumed  hereon,  for  loss  to  bullion,  casts,  curiosities,  drawings, 
dies,  jewels,  manuscripts,  medals,  models,  patterns,  pictures,  scientific 
apparatus,  business  or  store  or  office  furniture  or  fixtures,  sculptures, 
frescoes,  decorations,  or  property  held  on  storage  or  for  repair. 

Hazards  not  covered.  This  company  will  not  be  liable  for  loss  by 
(a)  theft;  or  (b)  by  neglect  of  the  insured  to  use  all  reasonable  means 
to  save  and  preserve  the  property  at  and  after  a  fire,  or  when  the  prop- 
erty is  endangered  by  fire;  or  (c)  (unless  fire  ensues,  and  in  that  event 
for  the  damage  by  fire  only)  by  explosion  of  any  kind  or  lightning ;  or 
(d)  by  invasion,  insurrection,  riot,  civil  war,  or  commotion,  or  (except 
as  hereinafter  provided)  by  military  or  usurped  power,  or  order  of  any 
civil  authority,  but  the  company  will  be  liable  (unless  otherwise  pro- 
vided by  endorsement  hereon  or  added  hereto)  if  the  property  is  lost  or 
damaged,  by  fire  or  otherwise,  by  civil  authority  or  military  or  usurped 
power  exercised  to  prevent  the  spread  of  fire  not  originating  from  a 
cause  excepted  hereunder  and  which  fire  otherwise  probably  would  have 
caused  the  loss  of  or  damage  to  the  insured  property. 

Matters  avoiding  policy.  This  entire  policy  shall  be  void,  (a)  if  the 
insured  has  concealed  or  misrepresented  any  material  fact  or  circum- 
stances concerning  this  insurance  or  the  subject  thereof;  or,  (b)  in  case 
of  any  fraud  or  false  swearing  by  the  insured  touching  any  matter 
relating  to  this  insurance  or  the  subject  thereof,  whether  before  or  after 
a  loss. 

Unless  otherwise  provided  by  agreement  endorsed  hereon  or  added 
hereto,  this  entire  policy  shall  be  void,  (a)  if  the  insured  now  has  or 
shall  procure  any  other  insurance,  whether  valid  or  not,  on  property 
covered  in  whole  or  in  part  by  this  policy,  or  (6)  if  the  interest  of  the 
insured  be  other  than  unconditional  and  sole  ownership,  or  (c)  if  the 
subject  of  insurance  be  a  building  on  ground  not  owned  by  the  insured 
in  fee  simple,  or  (d)  if  with  the  knowledge  of  the  insured  foreclosure 
proceedings  be  commenced  or  notice  given  of  sale  of  any  property  cov- 
ered by  this  policy  by  virtue  of  any  mortgage  or  trust  deed,  or  (e)  if  this 
policy  be  assigned  before  a  loss. 

Matters  suspending  insurance.  Unless  otherwise  provided  by  agree- 
ment endorsed  hereon  or  added  hereto  this  company  shall  not  be  liable 
for  loss  or  damage  occurring  (a)  while  the  hazard  be  materially  increased 
by  any  means  within  the  control  of  the  insured;  or  (b)  if  the  subject  of 
insurance  be  a  manufacturing  establishment,  while  it  is  operated  in 
whole  or  in  part  at  night  later  than  ten  o'clock  or  while  it  ceases  to  be 
operated  beyond  the  period  of  ten  consecutive  days;  or  (c)  while 
mechanics  or  artisans  are  employed  in  building  or  altering  or  repairing 
the  described  premises  for  more  than  fifteen  days  at  any  one  time;  or 
(d)  while  illuminating  gas  or  vapor  be  generated  in  the  described  build- 
ing (or  adjacent  thereto)  for  use  therein;  or  (e)  while  there  be  kept, 
used  or  allowed  on  the  described  premises  (any  usage  or  custom  of  trade 
or  manufacture  to  the  contrary  notwithstanding)  calcium  carbide,  phos- 
phorus, dynamite,  nitro-glycerine,  fireworks  or  other  explosives;  or 
exceeding  one  quart  each  of  benzine,  gasoline,  naphtha  or  ether;  or  more 


STANDARD    FORM    OF    FIRE    INSURANCE    POLICY.  127 

than  twenty-five  pounds  of  gunpowder;  or  (/)  while  a  building  herein 
described  whether  intended  for  occupation  by  owner  or  tenant  is  vacant 
or  unoccupied  beyond  the  period  of  ten  (10)  consecutive  days ;  (g)  while 
the  interest  in,  title  to  or  possession  of  the  subject  of  insurance  is 
changed  excepting:  (1)  by  the  death  of  the  insured;  (2)  a  change  of 
occupancy  of  building  without  material  increase  of  hazard;  and  (3) 
transfer  by  one  or  more  several  copartners  or  coowners  to  the  others. 

Such  suspension  shall  not  extend  the  term  of  this  policy  nor  create 
any  right  for  refund  of  the  whole  or  any  portion  of  premium,  nor  affect 
the  respective  rights  of  cancellation. 

Chattel  mortgage.  Unless  otherwise  provided  by  agreement  in  writing 
endorsed  hereon  or  added  hereto  this  company  shall  not  be  liable  for  loss 
or  damage  to  any  property  insured  hereunder  while  encumbered  by  a 
chattel  mortgage,  but  the  liability  of  the  company  upon  other  property 
hereby  insured  shall  not  be  affected  by  such  chattel  mortgage. 

Fallen  building  clause.  Unless  otherwise  provided  by  agreement 
endorsed  hereon  or  added  hereto,  if  a  building  or  any  material  part 
thereof  fall,  except  as  the  result  of  fire,  all  insurance  by  this  policy  on 
such  building  or  its  contents  shall  immediately  cease. 

Removal  when  endangered  by  fire.  Should  any  of  said  property  be 
necessarily  removed  because  of  danger  from  fire,  and  there  is  no  other 
insurance  thereon,  that  part  of  this  policy  in  excess  of  the  value  of  the 
insured  property  remaining  in  the  original  location,  or,  if  there  is  other 
insurance  thereon,  that  part  of  this  policy  in  excess  of  its  proportion  of 
the  value  of  the  insured  property  remaining  in  the  original  location, 
shall,  for  the  ensuing  five  days  only,  cover  said  removed  property  in  its 
new  location  or  locations. 

Cancellation.  This  policy  shall  be  canceled  at  any  time  at  the  request 
of  the  insured,  in  which  case  the  company  shall,  upon  surrender  of  this 
policy,  refund  the  excess  of  paid  premium  above  the  customary  short 
rates  for  the  expired  time.  This  policy  may  be  canceled  at  any  time, 
without  tender  of  unearned  portion  of  premium,  by  the  company  by 
giving  five  (5)  days'  written  notice  of  cancellation  to  the  insured  and  to 
any  mortgagee  or  other  party  to  whom,  with  the  written  consent  of  the 
company,  this  policy  is  made  payable,  in  which  case  the  company  shall, 
upon  surrender  of  the  policy  or  relinquishment  of  liability  thereunder, 
refund  the  excess  of  paid  premium  above  the  pro  rata  premium  for  the 
expired  time. 

Duty  of  insured  in  case  of  loss.  When  a  loss  occurs  the  insured  must 
give  to  this  company  written  notice  thereof  without  unnecessary  delay ; 
and  shall  protect  the  property  from  further  damage ;  forthwith  separate 
the  damaged  and  undamaged  personal  property  and  put  it  in  the  best 
possible  order ;  and  without  unnecessary  delay  make  a  complete  inventory 
stating  as  far  as  possible  the  quantity  and  cost  of  each  article,  and  the 
amount  claimed  thereon. 

Within  sixty  days  after  the  commencement  of  the  fire  the  insured 
shall  render  to  the  company  at  its  main  office  in  California  named  herein 
preliminary  proof  of  loss  consisting  of  a  written  statement  signed  and 
sworn  to  by  him  setting  forth:  (a)  his  knowledge  and  belief  as  to  the 
origin  of  the  fire ;  ( b )  the  interest  of  the  insured  and  of  all  others  in  the 
property;  (c)  the  cash  value  of  the  different  articles  or  properties  and 
the  amount  of  loss  thereon ;  (d)  all  incumbrances  thereon ;  (e)  all  other 


128  INSURANCE  LAWS  OF  CALIFORNIA. 

insurance,  whether  valid  or  not,  covering  any  of  said  articles  or  prop- 
erties; (/)  a  copy  of  the  descriptions  and  schedules  in  all  other  policies 
unless  similar  to  this  policy,  and  in  that  event,  a  statement  as  to  the 
amounts  for  which  the  different  articles  or  properties  are  insured  in 
each  of  the  other  policies;  (g)  any  changes  of  title,  use,  occupation,  loca- 
tion or  possession  of  said  property  since  the  issuance  of  this  policy; 
(h)  by  whom  and  for  what  purpose  any  building  herein  described,  and 
the  several  parts  thereof,  were  occupied  at  the  time  of  the  fire. 

If  the  company  claims  that  the  preliminary  proof  of  loss  is  defective 
and  within  five  days  after  the  receipt  thereof  (without  admitting  the 
amount  of  loss  or  any  part  hereof)  notifies  in  writing  the  insured,  or 
the  party  making  such  proof  of  loss,  of  the  alleged  defects  (specifically 
stating  them)  and  requests  that  they  be  remedied  by  verified  amend- 
ments the  insured  or  such  party  within  ten  days  after  the  receipt  of  such 
notification  and  request  must  comply  therewith  or,  if  unable  so  to  do, 
present  to  the  company  an  affidavit  to  that  effect. 

The  insured  shall  also  furnish,  if  required,  as  far  as  it  is  practicable 
to  obtain  the  same,  verified  plans  and  specifications  of  any  buildings, 
fixtures  or  machinery  destroyed  or  damaged;  and  the  insured  shall 
exhibit  to  any  person  designated  in  writing  by  this  company  all  that 
remains  of  any  property  herein  described  and  shall  submit  to  examina- 
tion under  oath,  as  often  as  required,  by  any  such  person,  and  subscribe 
to  the  testimony  so  given  and  shall  produce  to  such  person  for  examina- 
tion all  books  of  account,  bills,  invoices  and  other  vouchers,  and  permit 
extracts  and  copies  thereof  to  be  made,  and  in  case  the  originals  are  lost 
certified  copies,  if  obtainable,  shall  be  produced. 

Ascertainment  of  amount  of  loss.  This  company  shall  be  deemed  to 
have  assented  to  the  amount  of  the  loss  claimed  by  the*  insured  in  his 
preliminary  proof  of  loss,  unless  within  twenty  days  after  the  receipt 
thereof,  or,  if  verified  amendments  have  been  requested,  within  twenty 
days  after  their  receipt,  or  within  twenty  days  after  the  receipt  of  an 
affidavit  that  the  insured  is  unable  to  furnish  such  amendments,  the 
company  shall  notify  the  insured  in  writing  of  its  partial  or  total  dis- 
agreement with  the  amount  of  loss  claimed  by  him  and  shall  also  notify 
him  in  writing  of  the  amount  of  loss,  if  any,  the  company  admits  on 
each  of  the  different  articles  or  properties  set  forth  in  the  preliminary 
proof  or  amendments  thereto. 

If  the  insured  and  this  company  fail  to  agree,  in  whole  or  in  part,  as 
to  the  amount  of  loss  within  ten  days  after  such  notification,  this  com- 
pany shall  forthwith  demand  in  writing  an  appraisement  of  the  loss  or 
part  of  loss  as  to  which  there  is  a  disagreement  and  shall  name  a  com- 
petent and  disinterested  appraiser,  and  the  insured  within  five  days  after 
receipt  of  such  demand  and  name,  shall  appoint  a  competent  and  disin- 
terested appraiser  and  notify  the  company  thereof  in  writing,  and  the 
two  so  chosen  shall  before  commencing  the  appraisement,  select  a  com- 
petent and  disinterested  umpire. 

The  appraisers  together  shall  estimate  and  appraise  the  loss  or  part  of 
loss  as  to  which  there  is  a  disagreement,  stating  separately  the  sound 
value  and  damage,  and  if  they  fail  to  agree  they  shall  submit  their  dif- 
ferences to  the  umpire,  and  the  award  in  writing  duly  verified  of  any 
two  shall  determine  the  amount  or  amounts  of  such  loss. 

The  parties  to  the  appraisement  shall  pay  the  appraisers  respectively 


STANDARD   FORM    OF   FIRE   INSURANCE   POLICY.  129 

appointed  by  them  and  shall  bear  equally  the  expense  of  the  appraise- 
ment and  the  charges  of  the  umpire. 

If  for  any  reason  not  attributable  to  the  insured,  or  to  the  appraiser 
appointed  by  him,  an  appraisement  is  not  had  and  completed  within 
ninety  days  after  said  preliminary  proof  of  loss  is  received  by  this  com- 
pany, the  insured  is  not  to  be  prejudiced  by  the  failure  to  make  an 
appraisement,  and  may  prove  the  amount  of  his  loss  in  an  action  brought 
without  such  appraisement. 

Options  of  company  in  case  of  loss.  This  company  may,  at  its  option, 
take  all  or  any  part  of  the  property  for  which  insurance  hereunder  is 
claimed  at  its  ascertained  or  appraised  value,  and  may  also,  at  its  option, 
in  satisfaction  of  its  liability  hereunder,  repair,  rebuild  or  replace  any 
building  or  structure  or  machine  or  machinery  used  therein,  with  other 
of  like  kind  and  quality,  within  a  reasonable  time,  upon  giving  notice 
within  twenty  days  of  its  intention  so  to  do  after  the  receipt  by  it  of  the 
preliminary  proof  of  loss,  or  if  verified  amendments  have  been  requested, 
within  twenty  days  after  their  receipt,  or,  within  twenty  days  after 
the  receipt  of  an  affidavit  that  the  insured  is  unable  to  furnish  such 
amendments.  There  can  be  no  abandonment  to  this  company  of  any 
property. 

Apportionment  of  loss.  This  company  shall  not  be  liable  under  this 
policy  for  a  greater  proportion  of  any  loss  on  the  described  property,  or 
for  loss  by,  and  expenses  of,  removal  from  the  premises  endangered  by 
fire,  than  the  amount  hereby  insured  bears  to  the  entire  insurance  cover- 
ing such  property  whether  valid  or  not,  or  by  solvent  or  insolvent 
insurers. 

Loss  when  payable.  A  loss  hereunder  shall  be  payable  in  thirty  days 
after  the  amount  thereof  has  been  ascertained  either  by  agreement  or  by 
appraisement ;  but  if  such  ascertainment  is  not  had  or  made  within  sixty 
days  after  the  receipt  by  the  company  of  the  preliminary  proof  of  loss, 
then  the  loss  shall  be  payable  in  ninety  days  after  such  receipt. 

Non-waiver  by  appraisal  or  examination.  This  company  shall  not  be 
held  to  have  waived  any  provision  or  condition  of  this  policy  or  any  for- 
feiture thereof,  by  assenting  to  the  amount  of  the  loss  or  damage  or  by 
any  requirement,  act,  or  proceeding  on  its  part  relating  to  the  appraisal 
or  to  any  examination  herein  provided  for. 

Subrogation.  If  this  company  shall  claim  that  the  fire  was  caused  by 
the  act  or  neglect  of  any  person  or  corporation,  this  company  shall,  on 
payment  of  the  loss  be  subrogated  to  the  extent  of  such  payment  to  all 
right  of  recovery  by  the  insured  for  the  loss  resulting  therefrom,  and 
such  right  shall  be  assigned  to  this  company  by  the  insured  on  receiving 
such  payment. 

Time  for  commencement  of  action.  No  suit  or  action  on  this  policy 
for  the  recovery  of  any  claim  shall  be  sustained,  until  after  full  com- 
pliance by  the  insured  with  all  of  the  foregoing  requirements,  nor  unless 
begun  within  fifteen  months  next  after  the  commencement  of  the  fire. 

Definitions.  Wherever  in  this  policy  the  word  "insured"  occurs,  it 
shall  be  held  to  include  the  legal  representatives  of  the  insured  in  case 
of  his  death,  and  wherever  the  word  "loss"  occurs,  it  shall  be  deemed  the 
equivalent  of  "loss  or  damage,"  and  wherever  the  words  "the  time  of 
loss  or  damage"  are  used  they  shall  be  deemed  the  equivalent  of  "the 
time  of  the  commencement  of  the  fire." 

9— IN 


130  INSURANCE  LAWS  OF  CALIFORNIA. 

Sec.  2.  There  shall  be  printed  on  the  outside  fold  of  said  policy  in 
type  not  smaller  than  small  pica  the  following  words  in  this  form : 

READ  THIS  POLICY. 

Ins.  Co.  is  liable  only  for  actual  cash  value. 

Policy  is  void  in  case  of  any  fraud,  false  swearing,  mis- 
representation or  concealment  about  material  facts. 

Policy  is  void,  unless  otherwise  agreed  in  writing,  if 

1st.  It  is  assigned  before  loss ; 

2nd.  Insured  has  or  shall  procure  other  insurance ; 

3rd.  Any  change  occurs  in  location  of  property ; 

4th.  Insured  building  is  on  ground  not  owned  in  fee  simple 
by  insured ; 

5th.  Insured  is  not  sole  and  unconditional  owner. 

Policy  is  suspended,  unless  otherwise  agreed  in  writing,  if 

6th.  Described  building  becomes  vacant  or  unoccupied  for 
ten  days ; 

7th.  Mechanics  are  employed  more  than  fifteen  days  in 
repairing  same; 

8th.  Property  is  or  becomes  encumbered  by  chattel  mort- 
gage; 

9th.  Illuminating  gas  or  vapor  is  generated  in  or  adjacent 
to  described  building; 

10th.  Explosives  or  prohibited  qualities  of  gasoline,  etc.,  are 
kept  on  premises. 

Insurance  ceases  if  described  building  or  any  material  part 
falls  except  as  result  of  fire. 

Policy  does  not  cover  certain  enumerated  personal  property. 

Note  particularly  duty  of  insured  in  case  of  loss ; 

Also  provisions  avoiding  or  suspending  policy,  including 
changes  of  ownership  or  possession. 

Sec.  3.  By  special  agreement  endorsed  on  the  policy  or  added  thereto 
the  provisions  regarding  appraisement  or  apportionment  of  loss  may  be 
waived  and  the  valuations  of  all  or  any  of  the  insured  property  in  case 
of  total  loss  may  be  agreed  upon  in  advance  of  loss. 

Sec.  4.  Said  standard  form  of  policy  shall  be  plainly  printed  and  no 
portion  thereof  shall  be  in  type  smaller  than  small  pica  and  subheads 
shall  be  in  type  larger  than  pica,  and  the  lines  of  the  policy  shall  be 
numbered  consecutively. 

Sec.  5.  This  act  shall  not  apply  to  any  company  organized  under 
an  act  entitled  ' '  An  act  to  provide  for  the  organization  and  management 
of  county  fire  insurance  companies, ' '  approved  April  1,  1897,  or  amend- 
ments to  that  act,  but  all  other  fire  insurance  policies  on  property  in 
California  shall  be  on  said  standard  form,  and,  except  as  herein  pro- 
vided, shall  not  contain  additions  thereto.  No  parts  of  the  standard 
form  shall  be  omitted  therefrom. 

Sec.  6.  The  blanks  "in  said  standard  form  shall  be  appropriately 
filled.  The  company  may  add  to  the  standard  form  any  matter  relat- 
ing to  its  financial  condition,  directors,  officers,  stockholders  and  his- 
tory, and  the  address  of  its  home  office  and  principal  office  in  the 
United  States;  also  in  red  ink  any  provisions  respecting  any  limita- 
tion of  liability  of  the  company,  its  stockholders  or  members  which 


STANDARD  FORM  OF  FIRE  INSURANCE  POLICY.  131 

it  is  required  or  permitted  by  the  law  of  the  state  or  country  of  its 
organization  to  insert  in  its  policies. 

Sec.  7.  Clauses  may  be  added  to  the  standard  form  providing  for 
and  defining  the  rights,  duties  and  obligations  of  mortgagees,  assignees 
and  other  parties  who  have  acquired  or  may  acquire  an  interest  in,  right 
to  or  lien  upon  the  insured  property. 

Sec.  8.  No  clause  shall  be  inserted  or  rider  attached  affecting  the 
standard  form  liability  of  the  insurer  for  loss  or  damage  by  fire  occa- 
sioned either  directly  or  indirectly  by  earthquake,  hurricane,  volcanic 
action  or  other  disturbance  of  nature,  unless  the  same  shall  be  printed 
in  red  ink  in  type  larger  than  small  pica  and  at  the  head  of  the  policy 
there  shall  be  printed  in  red  ink  in  large  bold-faced  type  the  words, 
"This  policy  contains  limitations  of  liability  not  permitted  in  the  Cali- 
fornia standard  form." 

Sec.  9.  Clauses  may  be  added  to  the  standard  form  (a)  covering 
property  and  risks  not  otherwise  covered;  (b)  assuming  greater  liability 
than  is  otherwise  imposed  on  the  insurer;  (c)  granting  insured  permits 
and  privileges  not  otherwise  provided;  (d)  waivers  of  any  of  the  mat- 
ters avoiding  the  policy  or  suspending  the  insurance;  (e)  waivers  of 
any  of  the  requirements  imposed  on  the  insured  after  loss. 

Sec.  10.  Except  as  herein  otherwise  provided  clauses  may  be  attached 
to  the  standard  form  by  separate  riders  in  type  larger  than  pica  impos- 
ing specified  duties  and  obligations  upon  the  insured  and  limiting  the 
liability  of  the  insurer. 

Sec.  11.  Any  insurers,  other  than  corporations,  issuing  policies  on 
property  in  California,  shall  use  the  standard  form,  changing  only  such 
words  as  refer  to  the  corporation  or  company  or  to  officers  or  agents  of 
the  corporation  or  company,  and  in  regard  to  its  organization ;  and  such 
other  insurers  may  substitute  in  place  of  such  words  having  peculiar 
reference  to  corporations,  appropriate  words  having  similar  reference 
to  themselves. 

Sec.  12.  Any  insurer,  or  the  agent  countersigning  or  issuing  a  fire 
insurance  policy  covering  in  whole  or  in  part  property  in  California 
varying  from  the  California  standard  form  of  policy  except  as  herein 
provided  is  guilty  of  a  misdemeanor  but  any  policy  so  issued  shall  not- 
withstanding be  binding  upon  the  company  issuing  the  same. 

Sec.  13.  This  act  shall  take  effect  and  be  in  force  from  and  after  the 
first  day  of  August,  1909. 

Clauses  limiting  the  liability  of  the  insurer  or  imposing  specified  duties  and  obli- 
gations upon  the  insured  may  be  printed  on -separate  sheets,  and  thus  attached  as 
riders  or  such  clauses  may  be  placed  upon  the  same  sheet  of  paper  clearly  separating 
the  same.  If  the  last  plan  be  adopted,  however,  I  would  suggest  that  such  clause  be 
introduced  as  follows : 

The  first  clause  be  introduced  by  the  words,  "Rider  No.  1,"  the  second  clause, 
"Rider  No.  2,"  and  so  on.  Each  clause  should  be  introduced  with  its  appropriate 
rider  number :   Opinion  of  the  Attorney  General,  August  19,  1909. 


132  INSURANCE  LAWS  OF  CALIFORNIA. 


PILINGS  AND  FEES— SECRETARY  01=  STATE. 


POLITICAL  CODE. 

PART  III.     TITLE  I.     CHAPTER  III.     ARTICLE  V. 

Fees  of  secretary  of  state.     Exceptions.     Disposition  of  fees.     State  library 
fund. 

Sec.  409.  The  secretary  of  state,  for  services  performed  in  his  office, 
must  charge  and  collect  the  following  fees : 

1.  For  a  copy  of  any  law,  resolution,  record,  or  other  document  on 
file  in  his  office,  twenty  cents  per  folio. 

2.  For  comparing  a  copy  of  any  law,  resolution,  record,  or  other  docu- 
ment or  paper  with  the  original,  or  the  certified  copy  of  the  original,  on 
file  in  his  office,  five  cents  per  folio. 

3.  For  affixing  certificate  and  seal  of  state,  unless  otherwise  provided 
for,  two  dollars. 

4.  For  filing  articles  of  incorporation,  if  the  capital  stock  amounts  to 
twenty-five  thousand  dollars  or  less,  fifteen  dollars;  if  the  capital  stock 
amounts  to  over  twenty-five  thousand  dollars  and  not  over  seventy-five 
thousand  dollars,  twenty-five  dollars;  if  the  capital  stock  amounts  to 
over  seventy-five  thousand  dollars,  and  not  over  two  hundred  thousand 
dollars,  fifty  dollars ;  if  the  capital  stock  amounts  to  over  two  hundred 
thousand  dollars,  and  not  over  five  hundred  thousand  dollars,  seventy- 
five  dollars;  if  the  capital  stock  is  over  five  hundred  thousand  dollars, 
and  not  over  one  million  dollars,  one  hundred  dollars;  if  the  capital 
stock  is  over  one  million  dollars,  fifty  dollars  additional  for  every  five 
hundred  thousand  dollars  or  fraction  thereof  of  capital  stock  over  and 
above  one  million  dollars;  for  filing  articles  of  incorporation  without 
capital  stock,  except  cooperative  associations,  five  dollars;  for  filing 
articles  of  incorporation  of  cooperative  associations,  formed  under  the 
act  of  eighteen  hundred  and  ninety-five,  and  acts  supplementary  thereto 
or  amendatory  thereof,  fifteen  dollars. 

5.  For  recording  articles  of  incorporation,  twenty  cents  per  folio. 

6.  For  issuing  certificate  of  incorporation,  three  dollars. 

7.  For  filing  certificate  of  increase  of  capital  stock,  five  dollars  for 
every  fifty  thousand  dollars  or  fraction  thereof  of  such  increase. 

8.  For  filing  certificate  of  decrease  of  capital  stock,  five  dollars. 

9.  For  filing  notice  of  removal  of  principal  place  of  business,  five 
dollars. 

10.  For  filing  amended  articles  of  incorporation,  unless  otherwise 
provided  for,  five  dollars. 

11.  For  filing  certificate  of  creation  of  bonded  indebtedness,  or 
increase  or  decrease  thereof,  five  dollars. 

12.  For  issuing  certificate  of  increase  or  decrease  of  capital  stock, 
three  dollars. 

13.  For  filing  certificate  of  continuance  of  existence,  five  dollars. 


PILINGS   AND    FEES   OF    SECRETARY   OF    STATE.  133 

14.  For  issuing  certificate  of  continuance  of  existence,  three  dollars. 

15.  For  filing-  claim  to  trade-mark,  and  issuing  certificate  of  filing, 
five  dollars. 

16.  For  issuing  certificate  of  filing  of  any  document,  not  otherwise 
provided  for,  three  dollars. 

17.  For  filing  certificate  of  increase  or  decrease  of  number  of  directors, 
five  dollars. 

18.  For  issuing  certificate  of  increase  or  decrease  of  number  of  direct- 
ors, three  dollars. 

19.  For  receiving  and  recording  each  official  bond,  five  dollars. 

20.  For  filing  notice  of  appointment  of  agent,  five  dollars. 

21.  For  each  commission,  passport,  or  other  document  signed  by  the 
governor  and  attested  by  the  secretary  of  state  (pardons,  military  com- 
missions, commissions  issued  to  non-salaried  state  officers,  and  extra- 
dition papers  excepted),  five  dollars. 

22.  For  each  patent  for  land  issued  by  the  governor,  if  for  one  hun- 
dred and  sixty  acres  or  less,  one  dollar;  and  for  each  additional  one 
hundred  and  sixty  acres,  or  fraction  thereof,  one  dollar. 

23.  For  issuing  certificate  of  official  character,  two  dollars. 

24.  For  recording  miscellaneous  documents  or  papers,  twenty  cents 
per  folio. 

25.  For  filing  certified  copy  of  order  and  decree  of  court,  changing 
name,  or  certified  copy  of  order  and  decree  of  court,  dissolving  a  corpo- 
ration, five  dollars. 

No  member  of  the  legislature  or  state  officer  shall  be  charged  for  any 
search  relative  to  matters  appertaining  to  the  duties  of  his  office;  nor 
shall  he  be  charged  any  fee  for  a  certified  copy  of  any  law  or  resolution 
passed  by  the  legislature  relative  to  his  official  duties. 

All  fees  collected  by  the  secretary  of  state  must,  at  least  once  of  each 
week,  be  paid  into  the  state  treasury.  Three  thousand  five  hundred 
dollars  of  such  monthly  returns  shall  be  credited  to  and  constitute  the 
state  library  fund,  and  the  balance  shall  be  paid  into  the  general  fund 
of  the  state. 

Enacted  March  12,  1872.  Amended,  Stats.  1881,  p.  65;  Stats.  1895, 
p.  63 ;  Stats.  1901,  p.  86 ;  Stats.  1903,  p.  27 ;  Stats.  1905,  p.  623 ;  Stats. 
1907,  p.  352.    Amended  and  changed  from  416  to  409,  Stats.  1911,  p.  573. 


134  INSURANCE  LAWS  OF  CALIFORNIA. 

CIVIL  CODE. 

DIVISION  I.     PART  IV.     TITLE  I.     CHAPTER  VI. 

Designation  of  person  on  whom  process  may  be  served.     Service  on  the  secre- 
tary of  state,  when  valid. 

Sec.  405.  Every  corporation  other  than  those  created  by  or  under  the 
laws  of  this  state  must,  at  the  time  of  filing  the  certified  copy  of  its 
articles  of  incorporation,  file  in  the  office  of  the  secretary  of  state  a  des- 
ignation of  some  person  residing  within  this  state  upon  whom  process 
issued  by  authority  of  or  under  any  law  of  this  state  may  be  served.  A 
copy  of  such  designation,  duly  certified  by  the  secretary  of  state,  is  suffi- 
cient evidence  of  such  appointment.  Such  process  may  be  served  on 
the  person  so  designated  or,  in  the  event  that  no  such  person  is  desig- 
nated, then  on  the  secretary  of  state,  and  the  service  is  a  valid  service  on 
such  corporation. 

Enacted,  Stats.  1905,  p.  630.    Amended,  Stats.  1907,  p.  558. 

Foreign  corporation  must  file  certified  copy  of  articles  of  incorporation  (in 
office  of  secretary  of  state). 

Sec.  408.  Every  corporation  organized  under  the  laws  of  another 
state,  territory,  or  of  a  foreign  country,  which  (1)  is  now  doing  business 
in  this  state,  or  (2)  is  maintaining  an  office  herein,  or  (3)  wThich  shall 
hereafter  do  business  in  this  state,  or  (4)  maintain  an  office  herein,  or 
(5)  which  shall  enter  this  state  for  the  purpose  of  doing  business  herein, 
must  file  in  the  office  of  the  secretary  of  state  of  the  State  of  California 
(1)  a  certified  copy  of  its  articles  of  incorporation,  or  (2)  of  its  charter, 
or  (3)  of  the  statute  or  statutes,  or  (4)  legislative,  or  executive,  or  gov- 
ernmental act  or  acts  creating  it,  in  cases  where  it  has  been  created  by 
charter,  or  statute,  or  legislative,  or  executive,  or  governmental  act,  duly 
certified  by  the  secretary  of  state,  or  other  officer  authorized  by  the  law 
of  the  jurisdiction  under  which  such  corporation  is  formed  to  certify 
such  copy,  and  (5)  a  certified  copy  thereof,  duly  certified  by  the  secre- 
tary of  state  of  this  state,  (a)  in  the  office  of  the  county  clerk  of  the 
county  where  its  principal  place  of  business  is  located,  and  .(b)  also 
where  such  corporation  owns  property. 

Enacted,  Stats.  1905,  p.  630.    Amended,  Stats.  1907,  p.  559. 

Foreign  corporations,  fees  to  be  paid  by,  on  filing  certified  copies  of  articles 
of  incorporation. 

Sec.  409.  For  filing  and  issuing  a  certified  copy  as  required  in  sec- 
tion 408  of  this  code,  corporations  formed  under  the  laws  of  another 
state,  or  of  a  territory,  or  of  a  foreign  country,  must  pay  the  same  fees  as 
are  paid  by  corporations  formed  under  the  laws  of  this  state. 

Enacted,  Stats.  1905,  p.  631. 


TAXATION    OF   INSURANCE    COMPANIES.  135 

An  act  to  carry  into  effect  the  provisions  of  section  fourteen  of  article  thirteen 
of  the  constitution  of  the  State  of  California  as  said  constitution  was 
amended  November  8,  1910,  providing  for  the  separation  of  state  from  local 
taxation,  and  providing  for  the  taxation  of  public  service  and  other  corpora- 
tions, banks  and  insurance  companies  for  the  benefit  of  the  state,  all  relating 
to  revenue  and  taxation. 

[Approved  April  1,  1911  ;  Stats.  1911,  p.  530.] 

The  people  of  the  State  of  California,  represented  in  senate  and  assem- 
bly, do  enact  as  follows: 

Subjects  taxed  exclusively  for  state  purposes. 

Section  1.  Taxes  levied,  assessed  and  collected  as  hereinafter  pro- 
vided upon  railroads,  including  street  railways,  whether  operated  in 
one  or  more  counties;  sleeping  car,  dining  car,  drawing-room  car  and 
palace  car  companies,  refrigerator,  oil,  stock,  fruit,  and  other  car- 
loaning  and  other  car  companies  operating  upon  railroads  in  this  state ; 
companies  doing  express  business  on  any  railroad,  steamboat,  vessel,  or 
stage  line  in  this  state;  telegraph  companies;  telephone  companies;  com- 
panies engaged  in  the  transmission  or  sale  of  gas  or  electricity;  insur- 
ance companies ;  banks,  banking  associations,  savings  and  loan  societies, 
and  trust  companies ;  and  taxes  upon  all  franchises  of  every  kind  and 
nature,  shall  be  entirely  and  exclusively  for  state  purposes,  and  shall  be 
assessed  and  levied  by  the  state  board  of  equalization,  and  collected  in 
the  manner  hereinafter  provided.  The  word  "company"  and  the  word 
"companies"  as  used  in  this  act  shall  include  persons,  partnerships, 
joint  stock  associations,  companies,  and  corporations. 

Public  service  corporations,  how  taxed. 

Sec.  2.  All  railroad  companies,  including  street  railways,  whether 
operated  in  one  or  more  counties ;  all  sleeping  car,  dining  car,  drawing- 
room  car  and  palace  car  companies,  all  refrigerator,  oil,  stock,  fruit,  and 
other  car-loaning,  and  other  car  companies,  operating  upon  the  railroads 
in  this  state ;  all  companies  doing  express  business  on  any  railroad,  steam- 
boat, vessel,  or  stage  line  in  this  state ;  all  telegraph  and  telephone  com- 
panies engaged  in  the  transmission  or  sale  of  gas  or  electricity  shall 
annually  pay  to  the  state  a  tax  upon  their  franchises,  roadways,  road- 
beds, rails,  rolling  stock,  poles,  wires,  pipes,  canals,  conduits,  rights  of 
way,  and  other  property,  or  any  part  thereof,  used  exclusively  in  the 
operation  of  their  business  in  this  state,  computed  as  follows :  Said  tax 
shall  be  equal  to  the  percentages  hereinafter  fixed  upon  the  gross  receipts 
from  operation  of  such  companies  and  each  thereof  within  this  state. 
When  such  companies  are  operating  partly  within  and  partly  without 
this  state,  the  gross  receipts  within  this  state  shall  be  deemed  to  be  all 
receipts  on  business  beginning  and  ending  within  this  state,  and  a  pro- 
portion, based  upon  the  proportion  of  the  mileage  within  this  state  to  the 
entire  mileage  over  which  such  business  is  done,  of  receipts  on  all  busi- 
ness passing  through,  into,  or  out  of  this  state. 

The  percentages  above  mentioned  shall  be  as  follows:  On  all  railroad 
companies,  including  street  railways,  four  per  cent ;  on  all  sleeping  car, 
dining  car,  drawing-room  car,  palace  car  companies,  refrigerator,  oil, 
stock,  fruit,  and  other  car-loaning,  and  other  car  companies,  three  per 
cent;  on  all  companies  doing  express  business  on  any  railroad,  steam- 
boat, vessel  or  stage  line,  two  per  cent ;  on  all  telegraph  and  telephone 
companies,  three  and  one  half  per  cent ;  on  all  companies  engaged  in  the 


136  INSURANCE  LAWS  OF  CALIFORNIA. 

transmission  or  sale  of  gas  or  electricity,  four  per  cent.  Such  taxes  shall 
be  in  lieu  of  all  other  taxes  and  licenses,  state,  county,  and  municipal, 
upon  the  property  above  enumerated  of  such  companies  except  as  other- 
wise provided  in  section  fourteen  of  article  thirteen  of  the  constitution 
of  this  state,  and  as  provided  in  section  twenty-two  of  article  four  of  said 
constitution.  The  word  "municipal"  as  used  in  this  act  shall  apply  to 
incorporated  towns  and  cities  formed  under  article  eleven  of  the  consti- 
tution of  this  state  and  to  none  other. 

Tax  on  insurance  companies. 

Sec.  3.  Every  insurance  company  or  association  doing  business  in 
this  state  shall  annually  pay  to  the  state  a  tax  of  one  and  one  half  per 
cent  upon  the  amount  of  the  gross  premiums  received  upon  its  business 
done  in  this  state,  less  return  premiums  and  reinsurance  in  companies 
or  associations  authorized  to  do  business  in  this  state;  provided,  that 
there  shall  be  deducted  from  said  one  and  one  half  per  cent  upon  the 
gross  premiums  the  amount  of  any  county  and  municipal  taxes  paid  by 
such  companies  on  real  estate  owned  by  them  in  this  state.  This  tax 
shall  be  in  lieu  of  all  other  taxes  and  licenses,  state,  county,  and  munic- 
ipal, upon  the  property  of  such  companies,  except  county  and  municipal 
taxes  on  real  estate,  and  except  as  otherwise  provided  in  the  consti- 
tution of  this  state ;  provided,  that  when  by  the  laws  of  any  other  state 
or  country,  any  taxes,  fines,  penalties,  licenses,  fees,  deposits  of  money, 
or  of  securities,  or  other  obligations  or  prohibitions,  are  imposed  on 
insurance  companies  of  this  state,  doing  business  in  such  other  state  or 
country,  or  upon  their  agents  therein,  in  excess  of  such  taxes,  fines  pen- 
alties, licenses,  fees,  deposits  of  money,  or  of  securities,  or  other  obliga- 
tions or  prohibitions,  imposed  upon  insurance  companies  of  such  other 
state  or  country,  so  long  as  such  laws  continue  in  force,  the  same  obli- 
gations and  prohibitions  of  whatsoever  kind  must  be  imposed  by  the 
insurance  commissioner  upon  insurance  companies  of  such  other  state  or 
country  doing  business  in  this  state. 

The  amount  paid  to  the  beneficiary  under  a  return  premium  policy  would  not  be  a 
return  premium  within  the  meaning  of  section  3  of  the  foregoing  act. 

The  amount  paid  to  a  policyholder,  as  the  surrender  value  of  his  policy,  should  be 
deducted  from  the  gross  premium  as  a  return  premium,  it  being  the  return  of  an 
unearned  premium. 

Concerning  mutual  insurance  companies  that  return  at  the  end  of  the  year  the 
amount  not  necessary  for  the  expenses  during  that  year,  we  are  of  the  opinion  that 
the  amount  returned  at  the  end  of  the  year  as  not  necessary  for  the  expenses  of  that 
year  should  be  deducted  as  a  return  premium.  There  seems  to  be  no  difference 
between  this  and  the  so-called  dividend. 

Regarding  the  so-called  dividend  returned  at  the  end  of  each  year,  I  am  of  the 
opinion  that  this  question  should  be  answered  the  same  as  that  in  reference  to  mutual 
insurance  companies.  If  it  were  a  dividend,  as  we  ordinarily  understand  the  term, 
that  is  to  say,  earnings  distributed  to  the  stockholders  of  the  corporation,  then  clearly 
it  should  be  taxed. 

We  are  of  the  opinion  that  the  true  rule  is  that  the  so-called  dividends  are  to  be 
regarded  as  premiums  returned  as  unused  and  unearned :  Opinion  of  the  Attorney. 
General,  May  24,  1911. 

Tax  on  state  and  national  banks. 

Sec.  4.  The  shares  of  capital  stock  of  all  banks,  organized  under  the 
laws  of  this  state,  or  of  the  United  States,  or  of  any  other  state  and 
located  in  this  state,  shall  be  assessed  and  taxed  to  the  owners  or  holders 
thereof  by  the  state  board  of  equalization,  in  the  manner  hereinafter 
provided,  in  the  city  or  town  where  the  bank  is  located  and  not  else- 
where.    There  shall  be  levied  and  assessed  upon  such  shares  of  capital 


TAXATION   OF   INSURANCE    COMPANIES.  137 

stock  an  annual  tax,  payable  to  the  state,  of  one  per  centum  upon  the 
value  thereof.  The  value  of  each  share  of  stock  in  each  bank,  except 
such  as  are  in  liquidation,  shall  be  taken  to  be  the  amount  paid  in 
thereon,  together  with  its  pro  rata  of  the  accumulated  surplus  and 
undivided  profits.  The  value  of  each  share  of  stock  in  each  bank  which 
is  in  liquidation  shall  be  taken  to  be  its  pro  rata  of  the  actual  assets  of 
such  bank.  This  tax  shall  be  in  lieu  of  all  other  taxes  and  licenses,  state, 
county,  and  municipal,  upon  such  shares  of  stock  and  upon  the  property 
of  such  bank,  except  county  and  municipal  taxes  on  real  estate  and 
except  as  otherwise  provided  in  the  constitution  of  this  state.  In  deter- 
mining the  value  of  the  capital  stock  of  any  bank  there  shall  be  deducted 
from  the  value,  as  defined  above,  the  value,  as  assessed  for  county  taxes, 
of  any  real  estate,  other  than  mortgage  interests  therein,  owned  by  such 
bank  and  taxed  for  county  purposes.  The  banks  shall  be  liable  to  the 
state  for  this  tax  and  the  same  shall  be  paid  to  the  state  by  them  on 
behalf  of  the  stockholders  in  the  manner  and  at  the  time  hereinafter 
provided,  and  they  shall  have  a  lien  upon  the  shares  of  stock  and  upon 
any  dividends  declared  thereon  to  secure  the  amount  so  paid.  The 
moneyed  capital,  reserve,  surplus,  undivided  profits,  and  all  other 
property  belonging  to  unincorporated  banks  or  bankers  of  this  state, 
or  held  by  any  bank  located  in  this  state  which  has  no  shares  of  capital 
stock,  or  employed  in  this  state  by  any  branches,  agencies,  or  other  rep- 
resentatives of  any  banks  doing  business  outside  of  the  State  of  Cali- 
fornia, shall  be  likewise  assessed  and  taxed  to  such  banks  or  bankers 
by  the  said  board  of  equalization,  in  the  same  manner  as  above  provided 
for  incorporated  banks,  and  taxed  at  the  same  rate  that  is  levied  upon 
the  shares  of  capital  stock  of  incorporated  banks,  as  provided  in  the 
first  paragraph  of  this  section.  In  the  case  of  a  branch,  an  agency,  or 
other  representative  of  any  bank  doing  business  outside  of  this  state, 
the  capital  of  said  branch,  agency,  or  representative  used  in  this  state 
shall  be  taken  to  be  the  average  amount  owed  by  the  said  branch,  agency. 
or  representative  to  the  bank  of  which  it  is  a  branch,  agency,  or  repre- 
sentative during  the  year  ending  the  first  Monday  in  March.  The  value 
of  said  property  shall  be  determined  by  taking  the  entire  property 
invested  in  such  business,  together  with  all  reserve,  surplus,  and  undi- 
vided profits,  at  their  full  cash  value,  and  deducting  therefrom  the  value 
as  assessed  for  county  taxes  of  any  real  estate,  other  than  mortgage  inter- 
ests therein,  owned  by  such  bank  or  banker  and  taxed  for  county  pur- 
poses. Such  taxes  shall  be  in  lieu  of  all  other  taxes  and  licenses,  state, 
county,  and  municipal,  upon  the  property  of  the  banks  and  bankers  men- 
tioned in  this  section,  except  county  and  municipal  taxes  on  real  estate, 
and  except  as  otherwise  provided  in  the  constitution  of  this  state.  All 
moneyed  capital  and  property  of  the  banks  and  bankers  mentioned  in 
this  paragraph  shall  be  assessed  and  taxed  at  the  same  rate  as  an  incor- 
porated bank,  provided  for  in  this  section.  In  determining  the  value  of 
the  moneyed  capital  and  property  of  the  banks  and  bankers  mentioned 
in  this  section,  the  said  state  board  of  equalization  shall  include  and 
assess  to  such  banks  all  property  and  everything  of  value  owned  or  held 
by  them  which  would  go  to  make  up  the  value  of  the  capital  stock  of 
such  banks  and  bankers,  if  the  same  were  incorporated  and  had  shares  of 
capital  stock.  The  word  '  ■  banks ' '  as  used  in  this  act  shall  include  bank- 
ing associations,  unincorporated  banks  and  bankers,  branches,  agencies 


138  INSURANCE  LAWS  OF  CALIFORNIA. 

or  other  representatives  of  any  banks  doing  business  outside  of  the  State 
of  California?  savings  and  loan  societies,  and  such  trust  companies,  as 
conduct  the  business  of  receiving  money  on  deposit,  but  shall  not  include 
building  and  loan  associations. 

Nothing  in  this  act  shall  be  construed  to  relieve  any  bank  in  this  state 
from  the  payment  of  the  charges  for  examination  as  provided  in  section 
one  hundred  and  twenty  three  of  an  act  entitled  '  ■  An  act  to  define  and 
regulate  the  business  of  banking, ' '  approved  March  1st,  1909,  or  in  any 
acts  amendatory  thereof. 

Tax  on  franchises. 

Sec.  5.  All  franchises,  other  than  those  of  the  companies  mentioned 
in  sections  two,  three  and  four  of  this  act,  shall  be  assessed  at  their  actual 
cash  value,  after  making  due  deduction  for  good  will,  in  the  manner 
hereinafter  provided,  and  shall.be  taxed  at  the  rate  of  one  per  centum 
each  year,  and  the  taxes  collected  thereon  shall  be  exclusively  for  the 
benefit  of  the  state.  These  franchises  shall  include  the  actual  exercise 
of  the  right  to  be  a  corporation  and  to  do  business  as  a  corporation  under 
the  laws  of  this  state  and  the  actual  exercise  of  the  right  to  do  business 
as  a  corporation  in  this  state  when  such  right  is  exercised  by  a  corpora- 
tion incorporated  under  the  laws  of  any  other  state  or  country,  also  the 
right,  authority,  privilege,  or  permission  to  maintain  wharves,  ferries, 
toll  roads,  and  toll  bridges,  and  to  construct,  maintain  or  operate,  in, 
under,  above,  upon,  through  or  along  any  streets,  highways,  public 
places,  or  waters,  any  mains,  pipes,  canals,  ditches,  tanks,  conduits  or 
other  means  for  conducting  water,  oil,  or  other  substances. 

Nothing  in  this  section  contained  shall  be  construed  to  release  any 
corporation  from  the  payment  of  the  annual  license  tax  as  provided  for 
by  an  act  entitled  :  "An  act  relating  to  revenue  and  taxation,  providing 
for  a  license  tax  upon  corporations,  and  making  an  appropriation  for 
the  purpose  of  carrying  out  the  objects  of  this  act ' '  approved  March  20, 
1905,  and  the  acts  amendatory  thereof. 

Municipal  charges  for  special  franchises  not  released. 

Sec.  6.  Nothing  in  this  act  shall  be  construed  to  release  any  company 
from  the  payment  of  any  amount  agreed  to  be  paid  or  required  by  law 
to  be  paid,  now  or  hereafter,  for  any  special  privilege  or  franchise 
granted  by  any  of  the  municipal  authorities  of  this  state. 

"Gross  receipts  from  operation"  denned. 

Sec.  7.  The  term  "gross  receipts  from  operation"  as  used  in  section 
two  of  this^act  is  hereby  defined  to  include  all  sums  received  from  busi- 
ness done  within  this  state,  during  the  year  ending  the  thirty-first  day 
of  December  last  preceding,  including  the  company 's  proportion  of  gross 
receipts  from  any  and  all  sources  on  account  of  business  done  by  it 
within  this  state,  in  connection  with  other  companies  described  in  sec- 
tion 2  of  this  act. 

In  case  of  companies  operating  partly  within  and  partly  without  this 
state,  the  gross  receipts  within  this  state  shall  be  deemed  to  be  all 
receipts  on  business  beginning  and  ending  within  this  state,  and  the  pro- 
portion based  upon  the  proportion  of  the  mileage  within  this  state  to  the 
entire  mileage  over  which  such  business  is  done,  of  receipts  on  all  busi- 
ness passing  through,  into  or  out  of  this  state. 


TAXATION   OF   INSURANCE    COMPANIES.  139 

No  deduction  shall  be  allowed  from  the  gross  receipts  from  operation 
for  commissions,  rebates,  or  other  repayments,  except  only  such  refunds 
as  arise  from  errors  or  overcharges ;  nor  shall  any  deduction  be  allowed 
for  payments  from  gross  receipts  to  other  companies  for  any  purpose 
whatsoever,  except  such  refunds  as  arise  from  errors  or  overcharges. 

Income  derived  from  property  not  defined  in  this  act  as  operative 
property  shall  not  be  included  in  the  gross  receipts  for  the  purpose  of 
determining  the  tax  on  the  property  and  franchises  provided  for  in 
section  two  of  this  act. 

"Operative  property"  defined. 

Sec.  8.  1.  The  term  "operative  property"  as  used  in  this  act  shall 
include : 

(a)  In  the  case  of  railroad  companies,  including  street  railways: 
The  franchises,  roadway,  roadbed,  rails,  rolling  stock,  rights  of  way, 
sidings,  spur  tracks,  switches,  signal  systems,  cranes  and  structures 
used  in  loading  and  unloading  cars,  fences  along  the  right  of  way,  poles, 
wires,  conduits,  power  lines,  piers,  used  exclusively  in  the  operation  of 
the  railroad  business,  depot  grounds  and  buildings,  ferryboats,  tugs 
and  car-floats  used  exclusively  in  the  operation  of  the  railroad  business ; 
machine  shops,  repair  shops,  round  houses,  car  barns,  power  houses, 
substations,  and  other  buildings,  used  in  the  operation  of  the  railroad 
business  and  so  much  of  the  land  on  which  said  shops,  houses,  barns,  and 
other  buildings  are  situate  as  may  be  required  for  the  convenient  use  and 
occupation  of  said  buildings. 

(b)  In  the  case  of  sleeping  car,  dining  car,  drawing-room  car  and 
palace  car  companies,  refrigerator,  oil,  stock,  fruit,  and  other  car-loan- 
ing, and  other  car  companies  operating  upon  railroads  in  this  state : 
The  franchises,  cars,  and  other  rolling  stock. 

(c)  In  the  case  of  companies  doing  express  business  on  any  railroad, 
steamboat,  vessel,  or  stage  line  in  this  state :  The  franchises,  cars,  trucks, 
wagons,  horses,  harness,  and  safes. 

(d)  In  the  case  of  telegraph  and  telephone  companies  doing  business 
in  this  state :  The  franchises,  rights  of  way,  poles,  wires,  pipes,  conduits, 
cables,  switchboards,  telegraph  and  telephone  instruments,  batteries,  gen- 
erators, and  other  electrical  appliances,  and  exchange  and  other  build- 
ings used  in  the  telegraph  and  telephone  business  and  so  mnch  of  the 
land  on  which  said  buildings  are  situate  as  may  be  required  for  the  con- 
venient use  and  occupation  of  said  buildings. 

(e)  In  the  case  of  companies  engaged  in  the  transmission  or  sale  of 
gas  or  electricity:  The  franchises,  towers,  poles,  wires,  pipes,  canals, 
tunnels,  ditches,  flumes,  aqueducts,  conduits,  rights  of  way,  dams,  reser- 
voirs, water  and  water  rights  used  exclusively  in  the  business  of  the 
transmission  or  sale  of  gas  or  electricity ;  transformers,  substations,  gas- 
holders, gas  and  electric  generators,  switches,  switchboards,  meters,  elec- 
trical and  gas  appliances,  oil  tanks,  power  plants,  power  houses,  and 
other  buildings  and  structures  used  in  the  operation  of  the  business  of 
the  transmission  or  sale  of  gas  or  electricity  and  so  much  of  the  land  on 
which  said  buildings  and  structures  are  situate  as  may  be  required  for 
the  convenient  use  and  operation  of  said  buildings ;  provided,  that  the 
operative  property  of  the  companies  enumerated  in  this  section,  shall 
also  include  any  other  property  not  above  enumerated  that  may  be 
reasonably  necessary  for  use  by  said  companies  exclusively  in  the  opera- 


140  INSURANCE  LAWS  OF  CALIFORNIA. 

tion  and  conduct  of  the  particular  kinds  of  business  enumerated  in  sec- 
tion two  of  this  act. 

The  operative  property  mentioned  in  subdivisions  (a),  (b),  (c),  )d), 
and  (e),  of  this  section  shall  not  be  subject  to  taxation  for  county, 
municipal,  or  district  purposes  except  as  otherwise  provided  for  in  the 
constitution  and  laws  of  this  state;  provided,  however,  that  when  any 
piece  or  parcel  of  property  in  this  state  owned  by  any  of  the  companies 
mentioned  in  section  two  of  this  act  is  used  partially  by  such  company 
for  any  use  reasonably  necessary  to  the  operation  of  any  of  the  lines  of 
business  enumerated  in  section  two  of  this  act,  and  such  property  is  also 
partially  rented  to  or  used  by  others  or  is  partially  used  by  the  company 
for  some  other  lines  of  business  not  among  those  so  enumerated,  or  for 
purposes  not  reasonably  necessary  to  the  operation  of  any  of  said  enu- 
merated lines  of  business,  it  shall  be  considered  operative  property  in 
that  proportion  only  which  that  part  of  the  property  mentioned  in  this 
proviso  used  by  the  company  in  the  operation  of  any  of  said  enumerated 
lines  of  business  bears  to  the  whole  of  the  property  mentioned  in  this 
proviso. 

2.  Any  property  of  the  classes  mentioned  in  this  section  owned  by  a 
company  constructing  a  new  railroad,  street  railway,  telegraph  or  tele- 
phone system,  or  plant  or  system  for  the  transmission  or  sale  of  gas  or 
electricity,  no  part  of  which  new  road,  line,  plant,  or  system  is  in  opera- 
tion, and  the  same  classes  of  property  when  held  by  an  operating  com- 
pany solely  for  the  construction  of  a  new  railroad  or  railway  line,  a  new 
telegraph  or  telephone  system,  or  a  new  plant  or  system  for  the  trans- 
mission or  sale  of  gas  or  electricity,  and  not  to  be  used  for  betterments 
or  additions  to  roads,  lines,  plants,  or  systems  already  under  operation, 
shall  not  be  considered  operative  property  and  shall  be  subject  to  assess- 
ment and  taxation  for  county,  municipal,  and  district  purposes.  The 
property  of  any  company  mentioned  in  this  section  shall  be  deemed  to  be 
in  operation  as  to  such  part  of  the  new  road,  line,  plant,  or  system  as  may 
be  in  use  as  soon  as  it  offers  and  renders  service  to  the  public  for  com- 
pensation ;  provided,  however,  that  the  state  board  of  equalization  shall 
finally  determine  the  fact  of  such  operation  and  the  liability  of  any  such 
company  to  be  taxed  upon  its  gross  receipts  as  provided  in  section  two 
of  this  'act. 

3.  When  any  property  in  this  state  belonging  to  a  company  of  the 
classes  named  in  this  section  is  rendering  no  service  to  the  public  in  this 
state,  even  though  it  may  be  rendering  service  to  the  public  in  some 
other  state  or  states,  such  property  shall  not  be  considered  as  operative 
property,  and  shall  be  subject  to  assessment  and  taxation  for  county, 
municipal,  and  district  purposes. 

4.  The  state  board  of  equalization  shall  have  power  to  make  rules  and 
issue  instructions  not  inconsistent  wTith  the  constitution  and  laws  of  this 
state  for  the  guidance  of  assessors  in  determining  what  is  operative  prop- 
erty and  what  is  non-operative  property  of  companies  named  in  this 
section. 

Report  of  public  service  companies. 

Sec.  9.  Such  person  or  officer,  as  the  state  board  of  equalization  may 
designate,  of  each  of  the  companies  mentioned  in  section  two  of  this  act, 
shall,  on  or  before  the  first  Monday  in  March  of  each  year,  file  with  the 
said  board  a  report  signed  and  sworn  to  by  one  or  more  of  said  persons 


TAXATION   OF   INSURANCE    COMPANIES.  141 

or  officers,  showing  in  detail  for  the  year  ending  the  thirty-first  day  of 
December  last  preceding,  the  various  items  as  follows : 

1.  The  name  of  the  company,  its  nature,  whether  a  person  or  persons, 
a  partnership  (with  names  of  partners),  an  association,  or  corporation, 
and  under  the  laws  of  what  state,  territory  or  country  organized,  the 
nature  of  its  business,  the  location  of  its  principal  place  of  business,  the 
names  and  post  office  addresses  of  its  president,  secretary,  auditor, 
treasurer,  superintendent,  and  general  manager,  the  location  of  its  prin- 
cipal place  of  business  in  this  state,  the  name  and  post  office  address  of 
its  chief  officer  or  managing  agent  in  this  state,  and  the  names  and 
addresses  of  all  subsidiary  companies  whose  property  and  business  are 
operated  by  it  and  the  names  and  addresses  of  any  company  of  which 
it  may  be  subsidiary. 

2.  Each  of  the  companies  mentioned  in  section  two  of  this  act  shall 
report,  in  such  detail  as  the  state  board  of  equalization  shall  prescribe, 
all  of  its  property  in  this  state  which  comes  under  the  definition  of 
operative  property  in  section  eight  of  this  act.  When  any  such  company 
operates  both  within  and  without  this  state  it  shall  report  the  mileage 
over  which  it  operates  both  within  and  without  this  state.  It  shall  also 
report  the  location  of  said  property  within  this  state  by  counties,  cities 
and  counties,  municipalities,  and  districts,  in  such  manner  and  in  such 
detail  as  said  board  of  equalization  shall  prescribe.  It  shall  also,  at  the 
same  time,  furnish  a  duplicate  of  the  report  covering  so  much  of  said 
property  as  is  located  in  any  county,  city  and  county,  municipality,  or 
district,  to  the  assessor  of  the  county,  city  and  county,  city,  or  district 
in  which  such  property  is  located. 

The  state  board  of  equalization  may  require  the  filing  in  its  office  of 
maps  descriptive  of  all  the  operative  property  of  any  such  companies, 
and  may  prescribe  the  form  and  size  of  such  maps  and  the  details  to  be 
shown  therein,  and  may  require  that  similar  maps  descriptive  of  the 
operative  property  within  each  county,  city  and  county,  municipality, 
or  district,  shall  be  filed  in  the  assessor 's  office  in  each  county,  city  and 
county,  city,  or  district  in  which  any  of  said  property  is  located. 

3.  The  amount  of  capital  stock  issued,  and  the  amount  of  money 
received  therefor,  showing  separately  the  capital  stock  issued  and  the 
money  received  therefor  of  the  operating  company  and  of  each  subsid- 
iary company  in  this  state. 

4.  The  dividends  paid  during  the  year  ending  the  thirty-first  day  of 
December  last  preceding,  the  surplus  fund,  if  any,  on  said  thirty-first 
day  of  December,  or  between  such  periods  as  the  state  board  of  equaliza- 
tion may  determine,  those  of  the  operating  company  and  of  each  sub- 
sidiary company  in  this  state  to  be  shown  separately. 

5.  The  funded  and  floating  debts  and  the  rate  of  interest  thereon, 
showing  separately  the  debts  of  the  operating  company  and  of  each  sub- 
sidiary company  in  this  state,  on  the  thirty-first  day  of  December  last 
preceding. 

6.  The  market  value  of  the  stock  and  of  the  outstanding  bonds,  or, 
when  said  stock  or  bonds  have  no  market  value,  the  actual  value  thereof, 
for  such  periods  and  for  such  dates  as  the  state  board  of  equalization 
shall  prescribe. 

7.  The  amounts  expended  for  improvements  during  the  year  ending 


142  INSURANCE   LAWS   OF    CALIFORNIA. 

the  thirty-first  day  of  December  last  preceding,  how  expended  and  the 
character  of  the  improvements. 

8.  The  gross  receipts  from  operation  within  this  state  for  the  year 
ending  the  thirty-first  day  of  December  last  preceding,  the  gross  receipts 
from  such  classes  of  business  as  .the  state  board  of  equalization  may 
designate,  to  be  reported  separately ;  also,  where  the  property  and  busi- 
ness are  partly  within  and  partly  without  this  state,  the  gross  receipts 
for  said  period  on  all  business  beginning  and  ending  entirely  within  this 
state,  and  that  proportion  of  the  gross  receipts  from  all  business  passing 
through,  into,  or  out  of  this  state,  which  the  mileage  within  this  state 
bears  to  the  total  mileage  over  which  such  interstate  business  is  done  as 
further  defined  in  section  seven  of  this  act. 

9.  The  operating  and  other  expenses. 

10.  The  balances  of  profit  and  loss,  between  such  periods  as  the  state 
board  of  equalization  may  determine. 

11.  Such  other  matters  as  the  state  board  of  equalization  may  deem 
necessary  in  order  to  enable  it  to  assess  and  levy  the  taxes  provided  for 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state. 

Each  such  company  shall  include  in  its  report  the  property  and  busi- 
ness of  all  subsidiary  companies  as  that  term  is  hereinafter  defined  in 
this  section,  whose  property  and  business  are  operated  by  it,  whether 
by  virtue  of  a  lease,  an  operating  contract  or  agreement,  or  by  virtue  of 
control  through  the  ownership  of  stock  or  otherwise,  even  though  such 
subsidiary  companies  maintain  an  independent  legal  existence  and  sepa- 
rate accounts. 

The  term  "subsidiary  company"  is  hereby  defined  as  applying  to  a 
company  which  is  merged  in  the  operating  system  of  an  operating  com- 
pany in  any  of  the  ways  above  stated,  whose  property  and  franchises 
would  be  taxable  under  section  two  of  this  act  if  the  same  were  operated 
independently.  No  separate  report  need  be  rendered  by  a  subsidiary 
company  whose  property,  franchises,  and  operations  are  fully  and  com- 
pletely covered  by  the  report  of  an  operating  company,  unless  the  state 
board  of  equalization  shall  deem  such  a  separate  report  necessary. 

Each  such  company  operating  the  property  and  business  of  a  sub- 
sidiary company  in  some  line  of  business  to  which  a  different  per- 
centage of  the  gross  receipts  is  applied  by  section  two  of  this  act  from 
that  applied  by  said  section  two  to  the  gross  receipts  of  the  operating 
company,  shall  report  such  receipts  of  the  subsidiary  company  sep- 
arately. 

Assessor  to  report  to  state  board  property  improperly  claimed  as  operative 
property. 
Sec.  10.  If  any  assessor  finds  in  the  report  of  the  operative  prop- 
erty in  his  county,  city  and  county,  municipality,  or  district,  furnished 
to  him  by  any  of  the  companies  as  required  in  section  nine  of  this  act, 
any  piece  or  parcel  of  property  which  he  regards  as  non-operative 
property,  or  partially  operative  and  partially  non-operative,  he  shall, 
within  thirty  days  after  receiving  such  report,  notify  the  state  board 
of  equalization  thereof  by  mail,  which  notice  shall  contain  a  general 
description  of  the  property  and  the  assessor's  reasons  for  regarding  the 
same  as  non-operative  property.  He  shall  also  mail  a  copy  of  the  notice 
to  the   company   whose  property  is  involved.     The   said  board  shall 


TAXATION   OF   INSURANCE    COMPANIES.  143 

investigate  the  nature  of  the  property  and  its  use,  and,  if  an  agreement 
between  the  said  board,  the  assessor,  and  the  company  as  to  the  proper 
classification  of  such  property  can  not  be  reached,  then  the  said  board 
shall,  under  such  rules  of  notice  as  it  may  deem  reasonable,  set  a  date 
for  a  hearing,  at  which  the  assessor  and  the  company  may  be  present  or 
represented.  At  such  hearing  the  board  shall,  from  the  evidence  pre- 
sented and  from  the  best  information  it  can  obtain,  decide  the  matter  in 
dispute,  and  determine  whether  such  property  is  operative  or  non- 
operative  or  in  what  proportion  operative  and  in  what  proportion  non- 
operative.  The  said  board  shall  enter  its  decision  in  its  minutes,  and 
shall  send  a  copy  thereof  to  the  assessor  and  the  company,  and  also  to 
the  proper  officer  of  any  city  affected  thereby.  Said  decision  shall  be 
binding  upon  all  parties,  the  state,  the  county,  city  and  county,  munic- 
ipality, or  district,  and  the  company,  unless  set  aside  by  a  court  of  com- 
petent jurisdiction,  and  each  such  assessor  must  note  the  decision  on  his 
assessment  roll,  and  must  assess  such  property  accordingly. 

If  the  state  board  of  equalization  shall  find  in  the  report  of  operative 
property  furnished  to  said  board  by  any  company  under  the  provisions 
of  section  nine  of  this  act,  any  piece  or  parcel  of  property  which  said 
board  regards  as  non-operative  property,  or  partially  operative  and  par- 
tially non-operative,  the  board  shall,  within  thirty  days  after  receiving 
such  report,  notify  said  company  thereof  in  writing,  which  notice  shall 
contain  a  general  description  of  the  property  and  the  reasons  for  regard- 
ing the  same  as  non-operative.  It  shall  also  mail  a  copy  of  the  notice  to 
any  assessor  in  whose  county,  city  and  county,  municipality,  or  district 
the  property  is  located.  If  an  agreement  between  the  said  board,  the 
assessor,  and  the  company  as  to  the  proper  classification  of  such  prop- 
erty can  not  be  reached,  then  the  said  board  shall,  under  such  rules  of 
notice  as  it  may  deem  reasonable,  set  a  date  for  a  hearing,  at  which  the 
assessor  and  the  company  may  be  present  or  represented.  At  such  hear- 
ing the  board  shall,  from  the  evidence  presented  and  from  the  best  infor- 
mation it  can  obtain,  decide  the  matter  in  dispute,  and  determine 
whether  such  property  is  operative  or  non-operative,  or  in  what  propor- 
tion operative  and  in  what  proportion  non-operative.  The  said  board 
shall  enter  its  decision  in  its  minutes,  and  shall  send  a  copy  thereof  to 
the  assessor  and  the  company,  and  also  to  the  proper  officer  of  any  city 
affected  thereby.  Said  decision  shall  be  binding  upon  all  parties,  the 
state,  the  county,  city  and  county,  municipality,  or  district,  and  the  com- 
pany, unless  set  aside  by  a  court  of  competent  jurisdiction,  and  each 
such  assessor  must  note  the  decision  on  his  assessment  roll  and  must 
assess  the  property  accordingly. 

Insurance  commissioner  to  report. 

Sec.  11.  The  insurance  commissioner  of  this  state  must  on  or  before 
the  last  day  of  March  in  each  year,  make  and  file  with  the  state  board 
of  equalization  a  report  showing : 

1.  All  companies,  domestic  and  foreign,  and  all  firms,  associations,  or 
persons,  engaged  in  the  business  of  insurance  in  this  state. 

2.  The  total  amount  of  the  gross  premiums  received  from  its  business 
in  this  state  by  each  of  said  companies,  firms,  associations,  and  persons 
during  the  year  ending  the  thirty-first  day  of  December  last  preceding. 

3.  The  amount  of  return  premiums  paid  on  business  done  in  this  state 
and  the  amount  of  reinsurance  on  business  done  in  this  state  paid  to 


144  INSURANCE   LAWS   OF   CALIFORNIA. 

other  insurance  companies  or  associations  authorized  to  do  business  in 
this  state,  by  said  companies,  firms,  associations,  and  persons,  during 
said  year. 

4.  The  amount  of  any  county  and  municipal  taxes  paid  during  said 
year  by  such  companies  on  real  estate  owned  by  them  in  this  state,  and 
where  said  real  estate  is  located. 

In  making  this  report  he  shall  list  separately  all  those  companies, 
firms,  associations,  or  persons,  which  under  the  second  proviso  in  subdi- 
vision (b)  of  section  fourteen  of  article  thirteen  of  the  constitution  and 
of  section  three  of  this  act,  are  subject  to  a  tax  at  a  rate  higher  than  one 
and  one  half  per  cent  on  their  gross  premiums,  or  to  any  additional  tax 
or  burden,  and  shall  indicate  in  each  case  the  amount  and  character  of 
said  tax  or  burden. 

Every  company,  firm,  association,  or  person  engaged  in  the  business 
of  insurance  in  this  state  shall  file  with  the  insurance  commissioner  on 
or  before  the  first  Monday  in  March  in  each  year  such  statements  in 
addition  to,  or  in  modification  of,  the  statements  required  to  be  rendered 
under  the  provisions  of  article  sixteen  of  chapter  three  of  title  one  of 
part  three  of  the  Political  Code  as  said  insurance  commissioner  shall 
deem  necessary  to  enable  him  to  prepare  the  report  required  of  him  in 
this  section  and  said  statements  shall  be  verified  in  the  same  manner 
as  is  provided  for  the  verification  of  other  statements  by  insurance 
companies  in  section  six  hundred  and  ten  of  the  Political  Code,  except 
that,  those  filed  by  foreign  companies  shall  be  verified  by  the  oath  of 
the  manager  thereof  residing  within  this  state. 

Bank  reports. 

Sec.  12.  The  president,  secretary,  treasurer,  cashier,  or  such  other 
officer  as  the  state  board  of  equalization  may  determine,  of  every  bank 
referred  to  in  section  fourteen  of  article  thirteen  of  the  constitution  of 
this  state,  shall  on  the  first  Monday  in  March  or  within  ten  days  there- 
after make  and  file  with  the  state  board  of  equalization  a  sworn  state- 
ment showing  the  condition  of  said  bank  at  the  close  of  business  on  the 
first  Monday  in  March,  and  showing  the  amount  of  its  authorized  capital 
stock,  the  number  of  shares  issued  and  the  par  value  thereof,  the  amount 
received  for  stock  issued,  the  amount  of  its  surplus  and  undivided 
profits,  if  any,  a  complete  list  of  the  names  and  residences  of  its  stock- 
holders and  the  number  of  shares  held  by  each  as  of  record  on  the  books 
of  the  bank  at  the  close  of  business  on  the  first  Monday  in  March ;  or, 
in  the  case  of  unincorporated  banks  and  bankers,  of  banks  having  no 
capital  stock  and  of  branches,  agencies,  or  other  representatives  of  banks 
doing  business  outside  of  this  state,  the  moneyed  capital,  reserve,  sur- 
plus, undivided  profits,  and  other  taxable  property,  as  further  defined 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state, 
used  by  them  in  the  banking  business  in  this  state,  also  a  description  of 
the  real  estate,  other  than  mortgage  interests  therein,  and  the  value  of 
each  piece  thereof  as  assessed  for  the  purpose  of  county  taxation  for  the 
then  current  fiscal  year.  Branches,  agencies,  or  other  representatives  of 
banks  doing  business  outside  of  this  state,  shall  report  the  average 
amount  owed  by  said  branches,  agencies,  or  other  representatives,  to 
the  banks  of  which  they  are  branches,  agencies,  or  representatives, 
during  the  year  ending  the  first  Monday  in  March,  also  a  description 
of  the  real  estate  other  than  mortgage  interests  therein,  and  the  value 


TAXATION    OF    INSURANCE    COMPANIES.  145 

of  each  piece  thereof  as  assessed  for  the  purpose  of  county  taxation  for 
the  then  current  fiscal  year.  The  state  board  of  equalization  shall  pre- 
scribe the  form  of  reports,  the  manner  of  their  verification,  and  may 
require  the  submission  of  tax  receipts,  or  copies  thereof  certified  to  be 
correct  by  any  notary  public,  in  order  to  verify  the  statements  as  to  the 
assessed  value  of  the  real  estate,  and  may  require  such  further  infor- 
mation or  statements  as  said  board  may  deem  necessary. 

Secretary  of  state  to  report  corporations,  etc. 

Sec.  13.  The  secretary  of  state  shall  before  the  first  day  of  April 
in  the  year  one  thousand  nine  hundred  and  eleven  report  to  the  state 
board  of  equalization  the  names,  principal  place  of  business,  date  of 
incorporation,  term  of  existence,  number  of  charter,  and  the  funded 
debt  if  any,  and  the  then  authorized  capital  stock  of  all  corporations 
whether  formed  under  the  laws  of  this  state  or  of  some  other  state  or 
country,  a  copy  of  whose  articles  of  incorporation  is  on  file  in  his  office, 
and  which  are  authorized  to  do  business  in  this  state,  and  at  such  times 
thereafter  and  as  often  as  the  state  board  of  equalization  shall  deter- 
mine, report  to  said  board  the  same  information  concerning  all  new 
corporations  whether  formed  under  the  laws  of  this  state  or  of  any  other 
state  or  country  a  copy  of  whose  articles  of  incorporation  shall  have 
been  filed  in  his  office  together  with  the  amount  of  the  capital  stock 
thereof  and  also  the  names  and  principal  place  of  business  of  all  corpo- 
rations filing  designation  of  agents  or  certificates  of  increase  or  decrease 
of  capital  stock  in  his  office  with  the  amount  of  the  increase  or  decrease 
of  the  capital  stock  thereof. 

Owners  of  franchises  to  report. 

Sec.  14.  The  owner  or  holder  of  every  franchise  subject  to  taxation 
as  provided  in  section  five  of  this  act,  shall  within  ten  days  after  the  first 
Monday  in  March  in  each  year  make  a  written  report  to  the  state  board 
of  equalization,  signed  and  sworn  to  by  the  holder  or  owner  himself,  if 
an  individual,  or  by  one  of  the  copartners  if  such  owner  or  holder  is  a 
copartnership,  or  by  the  president  or  vice-president  and  the  .treasurer  or 
secretary  if  the  owner  is  a  corporation,  containing  such  a  concise  state- 
ment or  description  of  every  franchise  possessed  or  enjoyed  on  said  day 
by  such  owner  or  holder,  as  the  state  board  of  equalization  may  prescribe, 
a  copy  of  the  law,  grant,  ordinance,  or  contract  under  which  the  same  is 
held,  or  if  possessed  or  enjoyed  under  a  general  law,  a  reference  to  such 
law,  a  statement  of  any  condition,  obligation,  or  burden  imposed  upon 
such  franchise,  or  under  which  the  same  is  enjoyed,  and  containing  also : 

1.  The  name  of  the  company,  its  nature,  whether  a  person  or  persons, 
a  partnership  (with  names  of  partners),  an  association,  or  corporation, 
and  under  the  laws  of  what  state,  territory,  or  country  organized,  the 
nature  of  its  business,  the  location  of  its  principal  place  of  business,  the 
names  and  post  office  addresses  of  its  president,  secretary,  auditor,  treas- 
urer, superintendent,  and  general  manager,  the  location  of  its  principal 
place  of  business  in  this  state,  the  name  and  post  office  address  of  its 
chief  officer  or  managing  agent  in  this  state,  and  the  names  and  addresses 
of  all  subsidiarv  companies  whose  property  and  business  are  operated 
by  it. 

2.  The  amount  of  its  authorized  capital  stock,  the  amount  thereof 

10— IN 


146  INSURANCE   LAWS    OF    CALIFORNIA. 

issued  and  outstanding  on  the  first  Monday  in  March,  and  the  amount 
paid  in  thereon  or  the  value  of  the  property  received  therefor. 

3.  The  funded  and  floating  debts  and  the  interest  paid  thereon  show- 
ing separately  the  debts  of  the  operating  company  and  of  any  subsidiary 
companies  in  this  state  on  the  thirty-first  day  of  December  last  pre- 
ceding. 

4.  The  market  value  of  the  stock  and  of  the  outstanding  bonds,  or, 
when  said  stock  or  bonds  have  no  market  value,  the  actual  value  thereof, 
for  such  periods  and  for  such  dates  as  the  state  board  of  equalization 
shall  prescribe. 

5.  The  assessed  value  of  its  property  as  assessed  for  the  current  fiscal 
year  in  each  county,  city  and  county,  and  city  in  the  state  for  the  pur- 
poses of  taxation,  and  if  any  property  of  such  corporation  be  assessed 
and  taxed  outside  of  the  State  of  California  the  place  where  assessed, 
the  amount  of  such  assessment  and  taxes  there  paid  during  such  current 
fiscal  year. 

In  case  the  company,  person,  firm,  association,  or  corporation  making 
such  report  can  not  or  does  not  fairly  and  fully  state  the  facts  and  mat- 
ters contained  in  the  foregoing  subdivisions  1  to  5  inclusive,  then  such 
company,  person,  firm,  association,  or  corporation  must  render  an  addi- 
tional report  cntaining  the  following  matters,  to  wit : 

6.  The  dividends  paid  during  the  year  ending  the  thirty-first  day  of 
December  last  preceding,  the  surplus  fund,  if  any,  on  said  thirty-first 
day  of  December,  or  between  such  periods  as  the  state  board  of  equaliza- 
tion may  determine.  Those  of  the  operating  company  and  of  each  sub- 
sidiary company  in  this  state  to  be  shown  separately. 

7.  The  gross  receipts  from  all  sources  for  the  year  ending  the  thirty- 
first  day  of  December  last  preceding,  from  the  entire  property  and  busi- 
ness, the  gross  receipts  from  such  classes  of  business  as  the  state  board 
may  designate,  to  be  reported  separately ;  also,  where  the  property  and 
business  are  partly  within  and  partly  without  this  state,  the  gross 
receipts  for  said  period  on  all  business  beginning  and  ending  entirely 
within  this  state,  and  that  proportion  of  the  gross  receipts  from  all  busi- 
ness passing  through,  into,  or  out  of  this  state,  which  the  mileage  within 
this  state  bears  to  the  total  mileage  over  which  such  interstate  business 
is  done  as  further  defined  in  section  seven  of  this  act. 

8.  The  operating  and  other  expenses. 

9.  The  balances  of  profit  and  loss,  between  such  periods  as  the  state 
board  of  equalization  may  determine. 

10.  Such  other  matters  as  the  state  board  of  equalization  may  deem 
necessary  in  order  to  enable  it  to  assess  and  levy  the  taxes  provided  for 
in  section  fourteen  of  article  thirteen  of  the  constitution  of  this  state. 

The  state  board  of  equalization  shall  ascertain  and  determine  from 
the  foregoing  reports  or  from  the  best  information  it  can  obtain  the 
actual  cash  value  on  the  first  Monday  in  March  of  each  such  franchise, 
and  shall  assess  and  levy  the  taxes  thereon  in  accordance  with  the  pro- 
visions of  subdivision  (d)  of  section  fourteen  of  article  thirteen  of  the 
constitution  of  this  state. 
Assessor  to  report  to  state  board. 

Sec.  15.  Every  assessor  or  auditor  shall,  in  the  manner,  at  the  times, 
and  for  the  year  required  by  the  state  board  of  equalization,  report  to 


TAXATION    OP    INSURANCE    COMPANIES.  147 

said  board  upon  such  forms  as  may  be  prescribed  by  said  board  the 
valuation  placed  by  him  upon  the  property  of  any  company  subject  to 
an  assessment  upon  its  franchise  under  the  provisions  of  this  act. 

Arbitrary  assessment  in  case  of  failure  or  refusal  to  report. 

Sec.  16.  If  any  company  mentioned  in  section  one  of  this  act  shall 
fail  or  refuse  to  furnish  to  the  state  board  of  equalization  within  the 
time  prescribed  in  this  act  the  verified  report  provided  for  in  this  act, 
the  state  board  of  equalization  must  note  such  failure  or  refusal  in  the 
record  of  assessments  for  state  taxes  hereinafter  in  this  act  provided 
for,  and  must  make  an  estimate  of  the  amount  of  the  gross  receipts,  gross 
premiums,  value  of  the  shares  of  capital  stock,  or  value  of  the  franchises, 
of  such  company  and  must  assess  the  same  at  the  amount  thus  estimated, 
which  assessment  shall  be  the  assessment  upon  which  the  taxes  upon  the 
property  or  franchise  of  the  company  for  such  year  shall  be  levied  and 
collected  as  provided  for  in  this  act.  And  if  in  the  succeeding  year  any 
such  company  shall  again  fail  or  refuse  to  furnish  the  verified  report 
required  by  this  act,  the  state  board  shall  make  an  estimate  of  the 
amount  of  the  gross  receipts,  gross  premiums,  value  of  the  shares  of 
capital  stock,  or  value  of  the  franchise  of  such  company,  which  estimate 
shall  not  be  less  than  twice  the  amount  of  the  estimate  made  by  said 
board  in  the  previous  year,  and  shall  note  such  failure  or  refusal  as 
above  provided,  and  the  said  estimate  so  made  shall  be  the  assessment 
upon  which  the  taxes  upon  the  property  or  franchise  of  the  company  for 
such  year  shall  be  levied  and  collected  as  provided  for  in  this  act.  In 
case  of  each  succeeding  consecutive  failure  or  refusal  the  said  board 
shall  follow  the  same  procedure  until  a  true  statement  shall  be  furnished. 

Any  company  failing  or  refusing  to  make  and  furnish  any  report  pre- 
scribed in  this  act  or  rendering  a  false  or  fraudulent  report  shall  be 
guilty  of  a  misdemeanor  and  subject  to  a  fine  of  not  less  than  three 
hundred  dollars  and  not  exceeding  five  thousand  dollars  for  each  such 
offense. 

Any  person  required  to  make,  render,  sign,  or  verify  any  report,  who 
makes  any  false  or  fraudulent  report,  with  intent  to  defeat  or  evade  the 
assessment  required  by  this  act  to  be  made,  shall  be  guilty  of  a  mis- 
demeanor, and  shall  for  each  such  offense  be  fined  not  less  than  three 
hundred  dollars  and  not  more  than  five  thousand  dollars,  or  be  impris- 
oned not  exceeding  one  year  in  the  county  jail  of  the  county  where  said 
report  was  verified,  or  be  subject  to  both  said  fine  and  imprisonment, 
at  the  discretion  of  the  court. 
Extension  of  time  for  filing  report. 

Sec.  17.  The  state  board  of  equalization  may,  for  good  cause  shown, 
by  order  entered  upon  its  minutes,  extend  for  not  exceeding  thirty  days, 
the  time  fixed  in  this  act  for  filing  any  report  herein  provided  for ;  pro- 
vided, however,  that  for  the  year  one  thousand  nine  hundred  and  eleven 
the  said  board  may  extend  the  period  herein  mentioned  for  not  exceeding 
sixty  days. 
State  board  to  meet  for  assessment. 

Sec.  18.  The  state  board  of  equalization  must  meet  at  the  state 
capitol  on  the  first  Monday  in  March  in  each  year,  and  continue  in  open 
session  from  day  to  day,  Sundays  and  holidays  excepted,  until  the  first 
Monday  in  July.     Between  the  first  Monday  in  March  and  the  third 


148  INSURANCE    LAWS    OP    CALIFORNIA. 

Monday  before  the  first  Monday  in  July  the  board  must  assess  and  levy 
the  taxes  as  and  in  the  manner  provided  for  in  this  act  and  in  section 
fourteen  of  article  thirteen  of  the  constitution  of  this  state.  The  assess- 
ments must  be  made  to  the  company,  person,  or  association  owning  or 
operating  the  property  subject  to  said  tax,  or,  in  the  case  of  banks, 
banking  associations,  savings  and  loan  societies  and  trust  companies,  to 
the  stockholders  therein.  If  the  name  of  the  owner  is  unknown  to  the 
board,  such  assessment  must  be  made  to  unknown  owners.  Clerical 
errors  occurring  or  appearing  in  the  name  of  any  company,  person, 
association,  or  stockholder  whose  property  is  correctly  assessed  shall  not 
invalidate  the  assessment;  provided,  however,  that  if  any  bank  shall 
by  resolution  of  its  board  of  directors,  request  the  state  board  of  equal- 
ization to  assess  to  and  in  the  name  of  such  bank  so  requesting,  the 
entire  taxable  value  of  all  the  shares  of  the  capital  stock  of  such  bank,  as 
determined  by  said  state  board,  instead  of  assessing  such  shares  to  and 
in  the  name  of  the  individual  stockholders  or  shareholders  owning  the 
same,  and  if  such  bank  shall  promise  that  it  will,  upon  being  notified 
by  said  state  board,  of  such  assessment  thereof  to  said  bank,  and  of  the 
amount  of  taxes  to  be  paid  upon  such  assessment,  pay  such  taxes  at  the 
times  when  taxes  assessed  and  levied  under  this  act  are  due  and  pay- 
able, which  request  to  assess  said  bank  and  promise  to  pay  said  tax  shall 
be  in  substantially  the  following  form : 

The  state  board  of  equalization  is  hereby  instructed  to  assess  in  the 
name  of  this  bank  and  not  to  the  individual  stockholders  or  shareholders 
therein,  the  taxable  value  of  all  the  shares  of  capital  stock  in  this  bank 
and  such  bank  hereby  promises  to  pay  to  the  state  treasurer  the  amount 
of  the  tax  levied  upon  such  assessment  when  such  taxes  are  due  and 
payable  under  the  laws  of  this  state. 


By  (here  insert  official  signing.) 
Then  the  state  board  may  assess  the  capital  stock  to  and  in  the  name 
of  such  bank  and  said  promise  to  pay  the  taxes  shall  be  binding  upon 
such  bank  and  collection  of  such  taxes  from  such  bank  may  be  enforced 
in  the  manner  and  by  the  same  method  as  is  provided  for  the  collection 
of  other  taxes  assessed  and  levied  under  this  act. 

On  the  third  Monday  before  the  first  Monday  in  July  the  said  board 
shall  publish  a  notice  in  one  daily  newspaper  of  general  circulation  pub- 
lished at  the  state  capital,  in  one  daily  newspaper  of  general  circulation 
published  in  the  city  and  county  of  San  Francisco,  and  in  one  daily 
newspaper  of  general  circulation  published  in  the  city  of  Los  Angeles, 
that  the  assessment  of  property  for  state  taxes  has  been  completed,  and 
that  the  record  of  assessments  for  state  taxes  will  be  delivered  to  the 
controller  on  the  first  Monday  in  July,  and  that  if  any  company,  person, 
or  association  is  dissatisfied  with  the  assessment  made  by  the  board,  it 
may,  at  any  time  before  the  taxes  thereon  shall  become  due  and  payable, 
apply  to  the  board  to  have  the  same  corrected  in  any  particular.  The 
board  shall  have  power  at  any  time  on  or  before  the  first  Monday  in 
July  to  correct  the  record  of  assessments  for  state  taxes  and  may 
increase  or  decrease  any  assessment  therein  if  in  its  judgment  the  evi- 
dence presented  or  obtained  warrants  such  action. 


TAXATION    OF   INSURANCE    COMPANIES.  149 

Record  of  assessments  for  state  taxes. 

Sec.  19.  The  state  board  of  equalization  must  prepare  each  year  a 
book,  in  one  or  more  volumes,  to  be  called  the  ' '  record  of  assessments  for 
state  taxes,  • '  in  which  must  be  entered,  either  in  writing  or  printing,  or 
by  both  writing  and  printing,  each  assessment  and  levy  made  by  said 
board  upon  the  property  and  franchises  mentioned  in  section  one  of 
this  act,  describing  the  property  assessed,  and  such  assessments  shall  be 
classified  and  entered,  in  such  separate  parts  of  said  record  as  the  board 
shall  prescribe.  On  the  first  Monday  in  July  the  secretary  of  the  state 
board  of  equalization  must  deliver  to  the  controller  of  state  the  record 
of  assessments  for  state  taxes,  certified  to  by  the  chairman  and  secretary 
of  the  board,  which  certificate  shall  be  substantially  as  follows : 

"We, ,  chairman,  and ,  secretary,  of  the 

.state  board  of  equalization  of  the  State  of  California  do  hereby  certify 
that  between  the  first  Monday  in  March  and  the  first  Monday  in  July, 
19 ,  the  state  board  of  equalization  made  diligent  inquiry  and  exam- 
ination to  ascertain  all  property  and  companies  subject  to  assessment 
and  taxation  for  state  purposes,  as  required  by  the  constitution  of  this 
state;  that  said  board  has  faithfully  complied  with  all  the  duties 
imposed  upon  it  by  the  constitution  and  laws  of  the  State  of  California ; 
that  said  board  has  not  imposed  any  unjust  or  double  assessment 
through  malice  or  ill  will,  or  otherwise ;  nor  allowed  any  company  or 
property  to  escape  a  just  assessment  through  favor  or  reward,  or  other- 
wise. ' ' 

But  the  failure  to  subscribe  such  certificate  to  such  record  of  assess- 
ments for  state  taxes,  or  any  certificate,  shall  not  in  any  manner  affect 
the  validity  of  any  assessment.  Such  record  of  assessments  shall  con- 
stitute the  warrant  for  the  controller  to  collect  the  taxes  assessed  and 
levied  upon  the  property  and  franchises  mentioned  in  section  one  of  this 
act. 

Sec.  20.  The  taxes  assessed  and  levied  as  provided  in  section  four- 
teen of  article  thirteen  of  the  constitution  of  this  state,  and  in  and  by 
the  provisions  of  this  act,  shall  be  due  and  payable  on  the  first  Monday 
in  July  in  each  year,  and  one  half  hereof  shall  be  delinquent  on  the  sixth 
Monday  after  said  first  Monday  in  July  at  six  o'clock  p.  m.,  and  unless 
paid  prior  thereto,  fifteen  per  cent  shall  be  added  to  the  amount  thereof, 
and  unless  paid  prior  to  the  first  Monday  in  February  next  thereafter  at 
six  o'clock  p.  m.,  an  additional  five  per  cent  shall  be  added  to  the  amount 
thereof;  and  the  unpaid  portion,  or  the  remaining  one  half  of  said  taxes 
shall  become  delinquent  on  the  first  Monday  in  February  next  succeed- 
ing the  day  upon  which  they  become  due  and  payable,  at  six  o'clock 
p.  m. ;  and  if  not  paid  prior  thereto  five  per  cent  shall  be  added  to  the 
amount  thereof;  provided,  that  all  taxes  provided  for  or  levied  under 
this  act  which  are  not  fully  secured  by  real  property  are  due  and  pay- 
able at  the  time  the  assessment  is  made.  When  in  the  opinion  of  the 
state  board  of  equalization  any  of  the  taxes  provided  for  in  this  section 
are  not  a  lien  upon  real  property  sufficient  to  secure  the  payment  of  the 
taxes,  said  board  may  direct  the  controller,  or  his  duly  authorized  rep- 
resentative, to  collect  the  same  at  any  time  before  the  first  Monday  in 
August  thereafter,  and  the  controller  may  collect  the  taxes  by  seizure 
and  sale  of  any  property  owned  by  the  company  against  whom  the  tax 
is  assessed. 


150  INSURANCE   LAWS   OF    CALIFORNIA. 

The  sale  of  any  property  so  seized  shall  be  made  at  public  auction  and 
of  a  sufficient  amount  of  the  property  to  pay  the  taxes,  penalties  and 
costs,  and  be  made  after  one  week's  notice  of  the  time  and  place  of  such 
sale  given  by  publication  in  a  newspaper  of  general  circulation  published 
in  the  county  where  the  property  seized  is  situate,  or  if  there  be  no  news- 
paper of  general  circulation  published  in  such  county,  then  by  posting 
of  such  notice  in  three  public  places  in  such  county.  Said  notice  shall 
contain  a  description  of  the  property  to  be  sold  together  with  a  state- 
ment of  the  amount  of  the  taxes,  penalties  and  costs  due  thereon  and  the 
name  of  the  owner  of  said  property  and  a  further  statement  that  unless 
the  taxes,  penalties  and  costs  are  paid  on  or  before  the  day  fixed  in  said 
notice  for  such  sale  of  said  property,  or  so  much  thereof  as  may  be  neces- 
sary to  pay  said  taxes,  penalties  and  costs,  said  property  will  be  sold  in 
accordance  with  law  and  said  notice.  On  payment  of  the  price  bid  for 
any  property  sold,  the  delivery  thereof  with  bill  of  sale  executed  by  the 
controller  vests  the  title  in  the  purchaser.  The  unsold  portion  of  any 
property  so  seized,  may  be  left  at  the  place  of  sale  at  the  risk  of  the 
owner.  All  of  the  proceeds  of  any  such  sale  in  excess  of  the  taxes,  pen- 
alties, and  costs,  must  be  returned  to  the  owner  of  the  property  sold,  and 
until  claimed  must  be  deposited  in  the  state  treasury  subject  to  the  order 
of  the  owner  thereof,  his  heirs,  or  assigns. 

Within  ten  days  after  the  receipt  of  the  record  of  assessments  for 
state  taxes,  the  controller  must  begin  the  publication  of  a  notice  to 
appear  daily  for  two  weeks,  in  one  daily  newspaper  of  general  circula- 
tion published  at  the  state  capital,  in  one  daily  newspaper  of  general 
circulation  published  in  the  city  and  county  of  San  Francisco,  and  in 
one  daily  newspaper  of  general  circulation  published  in  the  city  of  Los 
Angeles,  specifying : 

1.  That  he  has  received  from  the  state  board  of  equalization  the  record 
of  assessments  for  state  taxes. 

2.  That  the  taxes  therein  assessed  are  due  and  payable  on  the  first 
Monday  in  July  and  that  one  half  thereof  will  be  delinquent  on  the 
sixth  Monday  after  the  first  Monday  in  July  at  six  o'clock  p.  m.,  and 
that  unless  paid  to  the  state  treasurer  at  the  capitol  prior  thereto,  fifteen 
per  cent  will  be  added  to  the  amount  thereof,  and  unless  paid  prior  to 
the  first  Monday  in  February  next  thereafter  at  six  o'clock  p.  m.,  an 
additional  five  per  cent  will  be  added  to  the  amount  thereof ;  and  that 
the  remaining  one  half  of  said  taxes  will  become  delinquent  on  the  first 
Monday  in  February  next  succeeding  the  day  upon  which  they  became 
due  and  payable,  at  six  o'clock  p.  m. ;  and  if  not  paid  to  the  state  treas- 
urer at  the  capitol  prior  thereto,  five  per  cent  will  be  added  to  the 
amount  thereof. 

Taxes  a  lien. 

Sec.  21.  The  taxes  levied  under  the  provisions  of  this  act  shall  con- 
stitute a  lien  upon  all  the  property  and  franchises  of  every  kind  and 
nature  belonging  to  the  companies  subject  to  taxation  for  state  pur- 
poses, which  lien  shall  attach  on  the  first  Monday  in  March  of  each  year. 
Every  tax  herein  provided  for  has  the  effect  of  a  judgment  against  the 
company,  and  every  lien  created  by  this  act  has  the  effect  of  an  execu- 
tion duly  levied  against  all  property  of  the  delinquent ;  the  judgment  is 
not  satisfied  nor  the  lien  removed  until  such  taxes,  penalties,  and  costs 
are  paid,  or  the  property  sold  for  the  payment  thereof. 


TAXATION    OF   INSURANCE    COMPANIES.  151 

Taxes  to  be  paid  to  state  treasurer. 

Sec.  22.  All  taxes  assessed  and  levied  as  provided  in  this  act  shall 
be  paid  to  the  state  treasurer,  upon  the  order  of  the  controller,  without 
deduction  for  any  taxes  assessed  and  levied  to  pay  the  principal  and 
interest  of  any  bonded  indebtedness  mentioned  in  subdivision  (e)  of 
section  fourteen  of  article  thirteen  of  the  constitution  of  this  state,  and 
the  amount  due  to  the  cities,  cities  and  counties,  counties,  towns,  town- 
ships, and  districts  on  account  of  said  taxes  assessed  and  levied  for  such 
bonded  indebtedness  shall  be  paid  to  said  cities,  cities  and  counties, 
counties,  towns,  townships,  or  districts  in  the  manner  hereinafter  in  this 
act  provided. 

The  controller  must  mark  the  date  of  payment  of  any  tax  on  the  rec- 
ord of  assessments  for  state  taxes.  He  must  give  a  receipt  to  the  person 
paying  any  tax,  or  any  part  of  any  tax,  specifying  the  amount  of  the 
assessment  and  the  tax,  or  part  of  tax,  paid,  and  the  amount  remaining 
unpaid,  if  any,  with  a  description  of  the  property  assessed;  provided, 
that  the  receipt  for  the  second  half  of  the  taxes  may  refer,  by  number  or 
in  any  other  intelligible  manner,  to  the  receipt  given  for  the  first  half 
of  said  taxes,  in  lieu  of  a  description  of  the  property  assessed. 

Whenever  any  taxes,  penalties,  or  costs  collected  and  paid  to  the  state 
treasurer  under  the  provisions  of  this  act,  shall  have  been  paid  more 
than  once,  or  shall  have  been  erroneously  or  illegally  collected,  or  when 
any  taxes  shall  have  been  collected  and  paid  pursuant  to  this  act  upon 
a  computation  erroneously  made  by  reason  of  clerical  mistake  of  the 
officers  or  employees  of  the  state  board  of  equalization,  or  shall  have 
been  computed  in  a  manner  contrary  to  law,  the  state  board  of  equaliza- 
tion shall  certify  to  the  state  board  of  examiners  the  amount  of  such 
taxes,  penalties,  or  costs,  collected  in  excess  of  what  was  legally  due, 
from  whom  they  were  collected  or  by  whom  paid,  and  if  approved  by 
said  board  of  examiners,  the  same  shall  be  credited  to  the  company  or 
person  to  whom  it  rightfully  belongs,  at  the  time  of  the  next  payment 
of  taxes.  No  claim  for  such  credit  shall  be  so  audited,  approved,  allowed, 
or  paid  unless  presented  within  one  year  after  the  payment  sought  to 
be  refunded. 

Protest  of  taxes. 

Sec.  23.  Any. company,  person,  or  association  dissatisfied  with  any 
assessment  made  by  the  state  board  of  equalization  may  bring  an  action 
against  the  state  treasurer  for  the  recovery  of  any  taxes,  penalties,  or 
costs  paid  on  such  assessment,  but  no  such  action  may  be  brought  later 
than  the  third  Monday  in  February  next  following  the  day  on  which 
the  taxes  were  due,  nor  unless  such  company,  person  or  association  shall 
have  filed  with  the  state  controller  at  the  time  of  payment  of  such  taxes 
a  written  protest  stating  whether  the  whole  assessment  is  claimed  to 
be  void,  or  if  a  part  only,  what  part,  and  the  grounds  upon  which  such 
claim  is  founded ;  and  when  so  paid  under  protest  the  payment  shall  in 
no  case  be  regarded  as  voluntary.  Whenever  under  the  provisions  of 
this  section  an  action  is  commenced  against  the  state  treasurer,  a  copy 
of  the  complaint  and  of  the  summons  must  be  served  upon  the  treasurer, 
or  his  deputy.  At  the  time  the  treasurer  demurs  or  answers,  he  may 
demand  that  the  action  be  tried  in  the  superior  court  of  the  county  of 
Sacramento,  which  demand  must  be  granted.  The  attorney  general 
must  defend  the  action.    The  provisions  of  the  Code  of  Civil  Procedure 


152  INSURANCE   LAWS   OF    CALIFORNIA. 

relating  to  pleadings,  proofs,  trials,  and  appeals  are  applicable  to  the 
proceedings  herein  provided  for.  A  failure  to  begin  such  action  within 
the  time  herein  specified  shall  be  a  bar  against  the  recovery  of  such 
taxes. 

Controller  to  send  notice  of  delinquent  taxes. 

Sec.  24.  Within  ten  days  after  the  first  Monday  in  February,  the 
controller  shall  send  by  mail  to  the  last  known  address  of  any  company 
whose  taxes  are  delinquent  a  notice  of  the  amount  of  said  taxes,  penalties, 
and  costs,  and  that  if  the  said  taxes,  penalties,  and  costs  are  not  paid  on 
or  before  the  first  Monday  in  March  next  thereafter  at  six  o'clock  p.  m., 
the  delinquent  company  if  it  be  a  domestic  corporation  will  forfeit  its 
charter  to  the  state,  and  that  if  the  delinquent  company  be  a  foreign 
corporation  it  will  forfeit  its  right  to  do  business  in  this  state. 

If  the  taxes,  penalties,  and  costs  are  not  paid  within  the  time  specified 
in  said  notice,  the  controller  shall,  on  said  first  Monday  in  March  at  six 
o'clock  p.  m.,  mark  on  the  record  of  assessments  for  state  taxes  opposite 
the  assessment  of  the  delinquent  company  the  words  "charter  forfeited 
to  the  state, ' '  if  the  delinquent  company  be  a  domestic  corporation,  and 
thereupon  said  charter  shall  be  so  forfeited,  and  if  the  delinquent  com- 
pany be  a  foreign  corporation  the  words  ' '  right  to  do  business  forfeited ' ' 
and  thereupon  said  right  to  do  business  shall  be  so  forfeited.  He  shall 
at  once  report  to  the  secretary  of  state  the  name  and  number  of  charter 
of  each  corporation  whose  charter  or  right  to  do  business  has  been 
forfeited  for  non-payment  of  taxes,  and  the  secretary  of  state  shall  at 
once  report  the  same  to  the  governor.  The  governor  shall  forthwith 
issue  his  proclamation,  declaring  that  the  charters  of  such  domestic 
corporations  have  been  forfeited  and  the  right  of  such  foreign  corpora- 
tions to  do  business  in  this  state  has  been  forfeited.  Said  proclamation 
shall  be  filed  immediately  in  the  office  of  the  secretary  of  state,  and  the 
secretary  of  state  shall  immediately  cause  a  copy  of  said  proclamation 
to  be  published  in  one  issue  of  one  daily  newspaper  of  general  circula- 
tion published  at  the  state  capital,  of  one  daily  newspaper  of  general 
circulation  published  in  the  city  and  county  of  San  Francisco,  and  of 
one  daily  newspaper  of  general  circulation  published  in  the  city  of  Los 
Angeles.  The  secretary  of  state  shall  thereupon  transmit  a  certified 
copy  of  the  proclamation  to  each  county  clerk  in  this  state,  who  shall 
file  the  same  in  his  office.  Any  such  corporation  making  subsequent 
payment  of  all  taxes,  penalties,  and  costs  due  the  state,  and  in  addition 
thereto  an  amount  equal  to  the  taxes  levied  under  this  act  for  the  year 
in  which  such  forfeiture  occurred,  for  each  year  subsequent  to  such 
forfeiture  and  to  the  time  of  such  redemption,  shall  be  relieved  of  such 
forfeiture,  and  the  controller  shall  notify  the  secretary  of  state  thereof, 
and  the  secretary  of  state  shall  annually  on  the  first  Monday  in  April 
transmit  to  the  county  clerk  of  each  county  in  this  state  a  list  of  the 
corporations  so  paying,  and  which  have  been  relieved  of  such  forfeiture, 
which  list  shall  be  by  said  county  clerk  filed  in  his  office ;  provided,  the 
rehabilitation  of  a  corporation  under  the  provisions  of  this  act  shall 
be  without  prejudice  to  any  action,  defense  or  right  which  accrued  by 
reason  of  the  original  forfeiture ;  and  provided,  that  in  case  the  name 
of  any  corporation  which  has  suffered  the  forfeiture  prescribed  in  this 
act,  or  a  name  so  closely  resembling  the  name  of  such  corporation  as 
will  tend  to  deceive,  has  been  adopted  by  any  other  corporation  since 


TAXATION    OF    INSURANCE    COMPANIES.  153 

the  date  of  said  forfeiture,  then  said  corporation  having  suffered  such 
forfeiture  shall  be  relieved  therefrom  pursuant  to  the  terms  of  this 
section  only  upon  the  adoption  by  said  corporation  seeking  revivor  of  a 
new  name,  and  in  such  case  nothing  in  this  act  contained  shall  be  con- 
strued as  permitting  such  corporation  to  be  revived  or  carry  on  any 
business  under  its  former  name;  and  such  corporation  shall  have  the 
right  to  use  its  former  name  or  take  such  new  name  only  upon  filing 
an  application  therefor  with  the  secretary  of  state  and  upon  the  issuing 
of  a  certificate  to  such  corporation  by  the  secretary  of  state  setting 
forth  the  right  of  such  corporation  to  take  such  new  name  or  use  its 
former  name,  as  the  case  may  be ;  provided,  however,  that  the  secretary 
of  state  shall  not  issue  any  certificate  permitting  any  corporation  to 
take  or  use  the  name  of  any  corporation  heretofore  organized  in  this 
state,  and  which  has  not  suffered  a  forfeiture  prescribed  by  this  act,  or 
to  make  or  use  a  name  so  closely  resembling  the  name  of  such  corpora- 
tion heretofore  organized  in  this  state  as  will  tend  to  deceive.  The 
provisions  of  title  9,  part  3  of  the  Code  of  Civil  Procedure,  in  so  far  as 
they  conflict  with  this  section,  are  not  applicable  to  corporations  seeking 
revivor  under  this  act. 

The  controller  may,  within  sixty  days  after  the  first  Monday  in  March 
bring  an  action  in  a  court  of  competent  jurisdiction  in  the  county  of 
Sacramento  in  the  name  of  the  people  of  the  State  of  California,  to 
collect  any  delinquent  taxes,  together  with  any  penalties,  or  costs,  which 
have  not  been  paid  in  accordance  with  the  provisions  of  this  act  and 
appearing  delinquent  upon  the  record  of  assessments  for  state  taxes 
hereinbefore  in  this  act  provided  for.  The  attorney  general  must  prose- 
cute such  action,  and  the  provisions  of  the  Code  of  Civil  Procedure 
relating  to  service  of  summons,  pleadings,  proofs,  trials,  and  appeals 
are  applicable  to  the  proceedings  herein  provided  for.  In#such  action 
a  writ  of  attachment  may  be  issued,  and  no  bond  or  affidavit  previous  to 
the  issuing  of  said  attachment  is  required.  In  the  case  of  companies 
whose  charters  or  right  to  do  business  has  been  forfeited  under  the  pro- 
visions of  this  act,  service  of  summons  may  be  made  upon  the  persons 
now  provided  for  by  law  to  be  served  as  agents  or  officers  of  any  of  such 
companies  and  such  persons  shall  be  deemed  to  be  the  agents  of  such 
companies  for  all  purposes  necessary  in  order  to  prosecute  such  action. 
Payment  of  the  taxes  and  penalties,  or  amount  of  the  judgment  recov- 
ered in  such  action  must  be  made  to  the  state  treasurer.  In  such  actions 
the  record  of  assessments  for  state  taxes,  or  a  copy  of  so  much  thereof  as 
is  applicable  in  said  action,  duly  certified  by  the  controller,  or  by  the 
secretary  of  the  state  board  of  equalization,  showing  unpaid  taxes 
against  any  company,  person  or  association  assessed  by  the  state  board 
of  equalization,  is  prima  facie  evidence  of  the  assessment  upon  the 
property  and  franchises,  the  delinquency,  the  amount  of  the  taxes, 
penalties,  and  costs  due  and  unpaid  to  the  state,  and  that  the  company, 
person,  or  association  is  indebted  to  the  people  of  the  State  of  California 
in  the  amount  of  taxes  and  penalties  therein  appearing  unpaid,  and 
that  all  the  forms  of  law  in  relation  to  the  assessment  and  levy  of  such 
taxes  have  been  complied  with. 


154  INSURANCE   LAWS   OF    CALIFORNIA. 

Powers  and  duties  of  state  board. 

Sec.  25.  In  addition  to  the  powers  and  duties  prescribed  in  the 
Political  Code,  it  is  the  duty  of  the  state  board  of  equalization,  and  the 
.said  board  shall  have  power,  for  carrying  this  act  into  effect : 

1.  To  prescribe  the  forms  upon  which  the  reports  required  by  sections 
9.  12  and  14  of  this  act  shall  be  made. 

2.  Whenever  deemed  necessary,  to  visit  as  a  board,  or  by  the  indi- 
vidual members  thereof,  or  to  send  its  secretary  or  duly  appointed 
representative  to  any  portion  of  this  state  for  the  purpose  of  inspecting 
property  and  learning  the  value  thereof,  and  of  collecting  information 
to  enable  it  to  justly  assess  and  levy  the  taxes  provided  for  in  this  act. 

3.  To  call  before  it,  or  any  mmber  thereof,  or  before  its  secretary  or 
duly  appointed  representative  on  such  visit,  any  public  officials,  and  to 
require  him  to  produce  any  public  record,  papers  or  documents  in  their 
custody. 

4.  To  issue  subpoenas  for  the  attendance  of  witnesses  or  the  produc- 
tion of  books  before  the  board,  or  any  member  thereof ;  which  subpoenas 
must  be  signed  by  a  member  of  the  board,  and  may  be  served  by  any 
person. 

5.  To  require  any  person  having  knowledge  of  the  business  of  any 
of  the  companies  mentioned  in  section  fourteen  of  article  thirteen  of  the 
constitution  of  this  state,  or  having  the  custody  of  the  books  and  accounts 
of  such  companies,  to  attend  before  the  board  or  any  member  thereof, 
or  before  the  secretary  or  the  duly  appointed  representative  of  said 
board  and  bring  with  him  for  inspection  any  books,  or  papers,  of  such 
company  in  his  possession  or  under  his  control,  and  to  testify  under  oath 
touching  any  matter  relating  to  the  assessment  to  be  made  under  this 
net.  A  member  of  the' board,  its  secretary,  or  duly  appointed  represen- 
tative is  authorized  to  administer  such  oath. 

6.  Said  board  of  equalization  is  hereby  authorized  and  empowered  to 
examine  the  books  and  accounts  of  all  companies  required  by  law  to 
report  to  it  and  to  employ  an  expert  accountant  or  accountants  to  assist 
in  the  examination  of  the  books  and  accounts  of  any  such  companies 
when  in  the  judgment  of  said  board  the  exigencies  of  the  case  may  so 
require. 

7.  It  shall  be  unlawful  for  any  member  or  ex-member  of  the  state 
board  of  equalization,  or  for  any  agent  employed  by  it,  or  for  the  con- 
troller, or  ex-controller,  or  for  any  person  employed  by  him  or  for  any 
person  who  may  at  any  time  have  obtained  such  knowledge  from  any  of 
the  foregoing  officers  or  persons,  to  divulge  or  make  known  in  any 
manner  whatever  not  provided  by  law,  any  of  the  following  items  of 
information  concerning  the  business  affairs  of  companies  reporting  to 
the  said  board : 

(a)  Any  information  concerning  the  business  affairs  of  any  company 
which  is  gained  during  an  examination  of  its  books  and  accounts  or  in 
any  other  manner,  and  which  information  is  not  required  to  be  reported 
to  the  state  board  of  equalization  in  the  reports  or  statements  provided 
for  in  paragraphs  numbered  one  to  ten  of  section  nine  and  paragraphs 
numbered  one  to  ten  of  section  fourteen  of  this  act. 

(b)  Any  information,  other  than  the  assessment  and  the  amount  of 
taxes  levied,  obtained  by  the  state  board  of  equalization  in  accordance 


TAXATION    OF   INSURANCE    COMPANIES.  155 

with  the  provisions  of  this  act,  from  any  company  other  than  any  of 
those  enumerated  in  sections  two,  three  and  four  of  this  act. 

(c)  Any  particular  item  or  items  of  information  relating  to  the 
disposition  of  its  earnings  contained  in  the  report  of  a  quasi-public  cor- 
poration which  any  such  corporation  may,  by  written  communication 
specifying  the  items  and  presented  at  the  time  when  it  files  its  report, 
request  shall  be  treated  as  confidential;  provided,  however,  that  if  the 
governor  shall  direct  that  any  of  the  information  herein  referred  to  be 
made  public,  then  it  shall  no  longer  be  unlawful  to  divulge  or  make 
known  the  same. 

Any  violation  of  the  provisions  of  this  subdivision  shall  be  a  misde- 
meanor and  shall  be  punished  by  a  fine  not  exceeding  five  hundred 
dollars,  or  by  imprisonment  not  exceeding  six  months,  or  both,  at  the 
discretion  of  the  court. 

County  auditors  to  report  assessments  of  real  estate  of  banks. 

Sec.  26.  On  the  second  Monday  in  August  of  each  year  the  auditor 
of  each  county  must  report  to  the  state  board  of  equalization,  in  addition 
to  the  items  required  to  be  so  reported  by  him  under  section  three  thou- 
sand seven  hundred  and  twenty-eight  of  the  Political  Code,  the  value  of 
each  piece  of  real  estate  other  than  mortgage  interests  therein  belonging 
to  each  bank  in  his  county  as  assessed  and  equalized  for  purposes  of 
county  taxation.  Whenever  the  state  board  of  equalization  is  satisfied 
after  investigation  that  any  county  assessor,  or  board  of  equalization, 
has  assessed  any  real  estate  belonging  to  any  bank  above  its  full  cash 
value  and  has  thereby  unjustly  reduced  the  amount  of  taxes  due  the 
state  from  said  bank,  said  state  board  shall,  under  such  rules  of  notice 
to  the  clerk  of  the  board  of  supervisors  of  the  county  affected  thereby  as 
the  said  state  board  shall  deem  reasonable,  equalize  the  assessed  value  of 
such  real  estate  and  shall  upon  completion  of  said  equalization  issue  an 
order  to  said  assessor  or  board  of  equalization  and  to  the  county  auditor 
of  the  county  in  which  said  real  estate  is  located,  fixing  the  assessed 
value  of  said  real  estate.  The  value  so  equalized  and  fixed,  and  no  other, 
shall  be  deemed  the  value,  as  assessed  for  county  taxes,  of  such  real 
estate,  and  the  sole  basis  of  taxation  upon  such  real  estate  for  county 
taxes.  A  copy  of  the  order  certified  by  the  secretary  of  the  state  board 
of  equalization  shall  be  prima  facie  evidence  of  the  regularity  of  all  pro- 
ceedings of  the  board  resulting  in  the  action  which  is  the  subject  matter 
of  the  order. 

State  board  to  equalize  assessments  of  real  estate  of  insurance  companies. 

Sec.  27.  The  state  board  of  equalization  shall  immediately  after  the 
county  and  city  assessments  have  been  completed,  ascertain  the  value  of 
any  real  estate  belonging  to  any  insurance  company  as  assessed  and 
equalized  for  purposes  of  county  and  of  city  taxation.  Whenever  the 
staff  board  of  equalization  is  satisfied  after  investigation  that  any 
county,  city  and  county,  city,  or  district  assessor,  or  board  of  equaliza- 
tion, has  assessed  any  real  estate  belonging  to  any  insurance  company 
above  its  full  cash  value  and  has  thereby  unjustly  reduced  the  amount 
of  taxes  due  the  state  from  said  insurance  company,  said  state  board 
shall,  under  such  rules  of  notice  to  the  clerk  of  the  board  of  supervisors 
of  the  county  or  the  proper  officer  of  the  city  affected  as  the  board  shall 
deem  reasonable,  equalize  the  assessed  value  of  such  real  estate  and  shall 


156     .  INSURANCE   LAWS   OF    CALIFORNIA. 

upon  the  completion  of  said  equalization,  issue  an  order  to  said  assessor 
or  board  of  equalization  and  to  the  county,  city  and  county,  city,  or 
district  auditor  or  clerk  of  the  county,  city  and  county,  city,  or  district 
in  which  said  real  estate  is  located,  fixing  the  assessed  value  of  said  real 
estate.  The  value  so  equalized  and  fixed,  and  no  other,  shall  be  deemed 
the  value,  as  assessed  for  county,  city  and  county,  city,  or  district  taxes, 
of  such  real  estate,  and  the  sole  basis  of  taxation  upon  such  real  estate, 
for  county,  municipal  and  district  taxes.  A  copy  of  the  order  certified 
by  the  secretary  of  the  state  board  of  equalization  shall  be  prima  facie 
evidence  of  the  regularity  of  all  proceedings  of  the  board  resulting  in 
the  action  which  is  the  subject  matter  of  the  order. 
Assessors  to  segregate  on  assessment  roll. 

Sec.  28.  Each  county,  city  and  county,  city,  and  district  assessor 
must  segregate  on  his  assessment  roll,  as  directed  by  the  state  board  of 
equalization : 

1.  The  assessments  made  by  the  state  board  of  equalization,  and  ap- 
portioned to  the  county,  city  and  county,  city,  town,  township,  or  dis- 
trict, upon  the  franchises,  roadway,  roadbed,  rails  and  rolling  stock  of 
all  railroads  operated  in  more  than  one  county  in  this  state  under  the 
provisions  of  the  Political  Code  as  the  same  existed  and  were  in  force 
on  the  seventh  day  of  November  in  the  year  one  thousand  nine  hundred 
and  ten ;  and 

2.  The  assessments  made  by  said  assessors  of  any  other  property 
enumerated  in  subdivisions  {a),  (b)  and  (d)  of  section  fourteen  of  article 
thirteen  of  the  constitution  of  this  state,  which  is  located  in  the  county, 
or  city  and  county,  or  any  city,  town,  township,  or  district  in  which  it  is 
subject  to  taxation  for  paying  the  principal  and  interest  of  any  bonded 
indebtedness  created  and  outstanding  by  any  city,  city  and  county, 
county,  town,  township,  or  district  prior  to  the  eighth  day  of  November 
in  the  year  one  thousand  nine  hundred  and  ten,  as  provided  in  sub- 
division (e)  of  section  fourteen  of  article  thirteen  of  the  constitution  of 
this  state. 

Immediately  upon  completion  of  the  assessment  and  equalization  of 
property  for  the  purposes  of  taxation  in  each  year  the  auditor  or  clerk 
of  each  county,  city  and  county  ^  city,  town,  or  district  must  transmit  to 
the  state  board  of  equalization  a  duplicate  of  that  part  of  the  assessment 
roll  containing  the  assessments  and  apportionments  referred  to  in  para- 
graphs one  and  two  of  this  section. 

WJienever  the  state  board  of  equalization  is  satisfied  after  investiga- 
tion that  any  county,  city,  or  other  assessor,  or  board  of  equalization, 
has  assessed  for  taxation  to  pay  the  principal  and  interest  of  any  bonded 
indebtedness  created  and  outstanding  by  any  county,  city  and  county, 
city,  town,  township,  or  district  prior  to  the  eighth  day  of  November  in 
the  year  one  thousand  nine  hundred  and  ten,  as  provided  in  subdivision 
(e)  of  section  fourteen  of  article  thirteen  of  the  constitution  of  this 
state,  any  of  the  property  taxes  exclusively  for  state  purposes  as  pro- 
vided in  subdivisions  (a),  (b)  and  (d)  of  section  fourteen  of  article 
thirteen  of  the  constitution  of  this  state,  or  has  assessed  for  purposes  of 
county,  city  and  county,  city,  or  district  taxation  the  property  other  than 
the  franchise  of  any  company  taxable  for  a  franchise  under  subdivision 
{d)  of  said  section  and  article  of  the  constitution,  above  its  full  cash 
value  and  has  thereby  unjustly  reduced  the  amount  of  taxes  due  the 


TAXATION    OF    INSURANCE    COMPANIES.  157 

state  on  such  property,  said  state  board  shall,  under  such  rules  of  notice 
to  the  clerk  of  the  board  of  supervisors  of  the  county,  or  city  and 
county,  or  to  the  city  clerk  of  the  city,  affected  thereby  as  the  board  shall 
deem  reasonable,  equalize  the  assessed  value  of  such  property,  and  shall 
issue  an  order  to  said  assessor  or  board  of  equalization  and  to  the  county 
or  city  auditor  or  clerk  of  the  county,  city  and  county,  or  city  in  which 
the  property  is  located,  fixing  the  assessed  value  of  such  property.  The 
value  so  equalized  and  assessed,  and  no  other,  shall  be  deemed  the  value 
of  said  property,  and  its  assessment  for  taxes  levied  to  pay  the  principal 
and  interest  of  any  such  outstanding  bonded  indebtedness,  and  in  the 
case  of  companies  taxable  for  a  franchise  under  said  subdivision  (d)  of 
said  section  and  article  of  the  constitution  shall  be  deemed  the  value  of 
the  said  property,  and  its  assessment  for  taxes  for  county,  city  and 
county,  municipal  and  district  purposes. 

When  making  the  tax  levy  and  fixing  the  rates  of  taxation  for  county, 
city  and  county,  city,  town,  township,  or  district  purposes,  the  board  of 
supervisors  of  any  county,  or  city  and  county,  and  the  corresponding 
authority  in  any  city,  having  bonded  indebtedness  issued  and  outstand- 
ing on  the  eighth  day  of  November  in  the  year  one  thousand  nine 
hundred  and  ten,  shall  fix  the  tax  rate  for  such  bonded  indebtedness 
separate  and  apart  from  all  other  tax  rates,  whether  for  subsequent 
bonded  indebtedness  or  for  other  purposes. 

The  county,  city  and  county,  or  city  auditor  or  clerk  shall  extend  on 
the  assessment  roll  agaipst  the  assessments  segregated  as  herein  pro- 
vided, the  taxes  necessary  to  pay  the  principal  and  interest  of  said 
bonded  indebtedness  at  the  same  rate  as  said  taxes  for  payment  of  prin- 
cipal and  interest  of  said  outstanding  bonded  indebtedness  shall  be 
levied  upon  the  other  classes  of  property  within  the  same  county,  city 
and  county,  city,  town,  township,  or  district,  and  the  amount  of  each 
such  taxes  shall  be  certified  by  said  auditor  or  clerk  to  the  controller  and 
the  amount  so  certified  shall  then  be  credited  by  the  controller  to  the 
county,  city  and  county,  city,  town,  township,  or  district  to  which  it  is 
due ;  and  said  amount  shall  be  paid  by  said  controller  to  the  treasurer  of 
such  county,  or  city  and  county  as  provided  in  section  twenty-nine  of 
this  act,  and  upon  such  payment  said  treasurer  shall  forthwith  certify 
such  fact  to  the  tax  collector  who  shall  thereupon  mark  upon  the  assess- 
ment roll  the  date  of  payment  and  the  words  "paid  by  the  state  treas- 
urer." The  city  clerk  or  auditor  shall  in  the  certificate  mentioned  in 
this  paragraph  also  state  the  date  when  taxes  in  such  city  shall  become 
delinquent. 
State  to  pay  part  of  principal  and  interest  of  outstanding  bond  debts. 

Sec.  29.  The  controller  shall  out  of  the  taxes  collected  by  him  as 
provided  in  this  act  credit  to  the  fund  created  by  an  act  of  the  thirty- 
ninth  session  of  the  legislature  entitled:  "An  act  appropriating  money 
for  the  purpose  of  payment  of  that  part  of  the  principal  and  interest  of 
any  bonded  indebtedness  created  and  outstanding  by  any  city,  city  and 
county,  county,  town,  township  or  district  on  the  eighth  day  of  Novem- 
ber in  the  year  one  thousand  nine  hundred  and  ten,  which  is  provided 
for  in  section  fourteen  of  article  thirteen  of  the  constitution  of  this 
state,  and  as  provided  in  an  act  of  the  thirty-ninth  session  of  the  legisla- 
ture entitled  'An  act  to  carry  into  effect  the  provisions  of  section  four- 
teen of  article  thirteen  of  the  constitution  of  the  State  of  California  as 


158  INSURANCE    LAWS   OF    CALIFORNIA. 

said  constitution  was  amended  November  8,  1910,  providing  for  the 
separation  of  state  from  local  taxation,  and  providing  for  the  taxation 
of  public  service  and  other  corporations  for  the  benefit  of  the  state,  all 
relating  to  revenue  and  taxation,'  "  the  money  due  to  each  county,  city 
and  county,  city,  town,  township,  or  district  on  account  of  taxes  to 
pay  the  principal  and  interest  of  any  bonded  indebtedness  created  and 
outstanding  by  any  city,  city  and  county,  county,  town,  township  or  dis- 
trict, on  the  eighth  day  of  November  in  the  year  one  thousand  nine  hun- 
dred and  ten.  The  controller  shall  in  the  months  of  October  and  March 
in  each  year  settle  with  the  treasurer  of  each  county  and  city  and  county 
for  the  money  collected  by  said  controller  under  this  section,  for  the 
moneys  due  said  county  or  city  and  county  and  the  townships  and  dis- 
tricts within  such  county  or  city  and  county,  in  the  same  manner  as  set- 
tlements are  made  between  the  county  or  city  and  county  treasurers  and 
the  controller  as  provided  for  in  section  three  thousand  eight  hundred 
and  sixty-six  of  the  Political  Code.  The  controller  shall  at  the  same 
times,  settle  with  each  city  and  town  for  the  moneys  due  such  city  or 
town  for  the  purposes  mentioned  in  this  section,  and  when  ready  for 
such  settlement  shall  notify  the  city  or  town  treasurer  of  the  amount 
of  money  due  the  city  or  town  for  said  purposes,  and  that  upon  receipt 
of  proper  authority  so  to  do,  he  will  forward  to  said  city  or  town  treas- 
urer a  warrant  for  the  amount  thereof;  provided,  however,  that  upon 
receipt  of  notice  from  any  such  city  or  town  treasurer  that  any  bond 
issue  matures  for  principal  or  interest  before,  the  date  of  such  settle- 
ment, which  notice  shall  state  the  amount  thereof  due  from  the  state  and 
the  date  of  maturity,  and  that  said  amount  due  from  the  state  is  required 
in  order  to  pay  the  same,  the  said  controller  must,  before  said  date  of 
maturity,  forward  his  warrant  to  such  city  or  town  treasurer  in  the 
manner  above  provided  for  the  amount  ascertained  by  him  to  be  due. 
The  treasurer  of  the  county  or  city  and  county  shall  forthwith,  upon 
receipt  by  him  of  the  moneys  so  hereinbefore  directed  to  be  paid  by 
said  controller,  credit  the  amount  so  received  by  him  to  the  county,  city 
and  county,  township  or  district,  respectively  entitled  thereto,  and  pay 
the  same  in  the  manner  provided  by  law. 

Any  excess  paid  by  the  controller  to  a  county,  city  and  county,  city. 
town,  or  to  a  county  or  city  and  county  or  any  township  or  district,  over 
and  above  the  state's  share  of  the  amount  actually  expended  by  such 
county,  city  and  county,  city,  town,  township  or  district,  to  pay  the 
interest  and  principal  of  said  bonded  indebtedness  in  any  year,  shall  be 
repaid  to  the  state  in  such  manner  as  the  controller  shall  direct. 

State  to  reimburse  counties. 

Sec.  30.  Until  the  year  one  thousand  nine  hundred  and  eighteen  the 
state  shall  reimburse  any  and  all  counties  which  sustain  loss  of  revenue 
by  the  withdrawal  of  railroad  property  from  county  taxation  for  the 
net  loss  in  county  revenue  occasioned  by  the  withdrawal  of  railroad 
property  from  county  taxation  in  the  manner,  at  the  times,  and  in  the 
amounts  specified  in  an  act  of  the  thirty-ninth  session  of  the  legislature 
entitled  "An  act  to  provide  for  the  reimbursement  of  counties  in  this 
state  which  sustain  net  loss  of  revenue  by  the  withdrawal  of  railroad 
property  from  county  taxation,  under  the  provisions  of  section  fourteen 
of  article  thirteen  of  the  constitution  of  this  state." 


TAXATION    OF    INSURANCE    COMPANIES.  159 

State  not  to  pay  county  treasurers'  expenses. 

Sec.  31.  The  provisions  of  section  three  thousand  eight  hundred  and 
seventy-six  of  the  Political  Code  shall  not  apply  to  the  settlements  made 
with  the  state  treasurer  under  sections  twenty-nine  and  thirty  of  this 
act,  but  the  county  board  of  supervisors  may  if  it  deem  necessary  allow 
the  county  treasurer  the  actual  expenses  incurred  in  collecting  the  money 
due  the  county  from  the  state. 

Counties  to  reimburse  loss  to  districts. 

Sec.  32.  The  board  of  supervisors  of  each  county  shall  in  the  month 
of  September  of  each  year  determine  the  amount  of  loss  to  each  district 
in  the  county  where  loss  is  occasioned  in  such  district  by  the  withdrawal 
from  local  taxation  of  property  taxed  for  state  purposes  only,  and  in 
the  month  of  December  next  thereafter  shall  reimburse  such  district 
from  the  general  fund  of  the  county  for  one  half  of  such  loss,  and  in  the 
month  of  May  next  thereafter  shall  reimburse  such  district  from  the 
general  fund  of  the  county  for  the  remaining  one  half  of  such  loss. 

All  property  in  state  subject  to  deficiency  tax. 

Sec.  33.  Any  tax  required  to  be  levied  for  state  purposes  as  pro- 
vided in  subdivision  (e)  of  section  fourteen  of  article  thirteen  of  the  con- 
stitution as  amended  the  eighth  day  of  November  in  the  year  one  thou- 
sand nine  hundred  and  ten,  to  meet  any  deficiency  in  the  state  revenue 
shall  be  assessed,  levied  and  collected  on  all  property  in  the  state,  not 
exempt  from  taxation  including  the  classes  of  property  enumerated  in 
this  act,  under  the  provisions  of  the  Political  Code  relating  to  the  assess- 
ment, levy  and  collection  of  state  and  county  taxes  as  said  provisions 
were  in  force  on  the  seventh  day  of  November  in  the  year  one  thousand 
nine  hundred  and  ten. 

Prior  laws  not  repealed  for  certain  purposes. 

Sec.  34.  Nothing  in  this  act  shall  be  construed  as  repealing  any  laws 
in  force  prior  to  the  eighth  day  of  November  in  the  year  one  thousand 
nine  hundred  and  ten,  relating  to  taxation,  in  so  far  as  said  laws  may  be 
necessary  for  the  assessment,  levy,  and  collection  of  state,  county,  city 
and  county,  municipal  or  district  taxes,  or  in  so  far  as  said  laws  may  be 
necessary  for  the  assessment,  levy  and  collection  of  the  taxes  provided 
for  in  section  twenty-two  of  article  four  of  the  constitution  as  amended 
on  the  eighth  day  of  November  in  the  year  one  thousand  nine  hundred 
and  ten ;  or  in  so  far  as  said  laws  may  be  necessary  for  the  assessment, 
levy  and  collection  of  the  taxes  for  state  purposes,  on  all  the  property 
in  the  state,  not  exempt  from  taxation,  to  meet  a  deficiency  in  the  reve- 
nues for  the  support  of  the  state  government,  or  to  pay  the  principal 
and  interest  of  any  bonded  indebtedness  created  and  outstanding  by  any 
city,  city  and  county,  county,  town,  township,  or  district,  both  as  pro- 
vided in  subdivision  (e)  of  section  fourteen  of  article  thirteen  of  the 
constitution  as  amended  on  the  eighth  day  of  November  in  the  year  one 
thousand  nine  hundred  and  ten. 

Sec.  35.     This  act  shall  take  effect  immediately. 


INDEX.  161 

INDEX. 


A 

Page. 
Abandonment.     (See  Marine  Insurance.) 

Accident  insurance  companies  doing  business  on  the  assessment  plan.  (See  Life, 
Health,  Accident  and  Annuity  or  Endowment  Insurance  Companies  doing- 
business  on  the  assessment  plan.) 

Accident  and  sick  benefit  associations.     (See  fraternal  benefit  societies.) 

Accident  and  health   insurance  companies.     (See  insurance  companies.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  what  other  kinds   of  insurance.     §  594,   Pol.    Code 7 

Insolvent,  when.     §  602,  Pol.  Code t 18 

Accumulations. 

How  may  be  invested.     §  421,  Civ.  Code 40 

Acknowledgment.     (See  Agent;  Process.) 

Actions. 

Not  to  be  transferred  to  federal  courts.     §  608,  Pol.  Code 23 

For  recovery  of  fines,  taxes,  assessments  and  penalties.     §  634,  Pol.  Code 36 

Plaintiff  may  join  different  parties.     §  383,  Code  Civ.  Pro 86 

To    recover    insurance,    what    defendant    claiming    exemption    must    plead. 
§  437,  Code  Civ.  Pro 86 

Acts.     (See  Statutes.) 

Of  insurance  commissioner  may  be  reviewed  by  court.     §  631,  Pol.  Code 35 

Actuary. 

Commissioner   may   employ.     §  601,   Pol.    Code 17 

Commissioner  may   employ.     §  629,    Pol.    Code ' 34 

Compensation   of.     §  601,    Pol   Code 17 

Compensation  of.     §  629,   Pol.   Code 34 

Must  certify  valuation  of  policies  of  fraternal  benefit  societies.     §  23,  Act 117 

Agents,  general. 

Appointment  of.     §  616,   Pol.   Code 28 

Filing  fee  of  appointment  of.     §  605,  Pol.  Code 22 

Service  of  process  on.     §  616.,  Pol.  Code 28 

Appointment  may  be  revoked.     §  616,  Pol.  Code  (note) 28 

Insurance  by.     §  2589,  Civ.  Code 65 

Agents  and  solicitors. 

License  of.     §  633,   Pol.  Code 36 

Fee.     §  605,   Pol.   Code 22 

Alphabetical  list  of.     §  633,  Pol.  Code 36 

Annual   report.     (See  annual  statement.) 

Insurance  commissioner.     §  595,  Pol.  Code 11 

Distribution  of.     §  337,  Pol.  Code  (note) 12 

Annual  statement. 

Filing  fee.     §  605,    Pol.    Code 22 

must  be  filed  before  engaging  in  business.     §  607,  Pol  Code 23 

How  verified.     §  610,  Pol.  Code 24 

When  to  be  filed.     §  611,  Pol.  Code 24 

Publication  of  synopsis  of.     §  611,  Pol.  Code 24 

By  companies  other  than  life,  must  show.     §  612,  Pol.  Code 24 

By  life,  health  and  accident  companies.     §  613,  Pol.  Code 26 

Insurance  commissioner  must  furnish  printed  forms  for.     §  615,  Pol.  Code 27 

Penalty  for  failure  to  file.     §  617,  Pol.  Code 29 

Of  fraternal  benefit  societies.     §  23,  Act 117 

Annuity  insurance  on  the  assessment  plan.  (See  Life,  Health,  Accident  and 
Annuity  or  Endowment  Insurance  Companies  doing  business  on  the 
Assessment  Plan.) 

11— IL 


162  INDEX. 

Arson.     (See  Crimes.)  Page. 

Defined.     §  447,   Pen.   Code 90 

Degrees  of.     §  453,   Pen.   Code 91 

First  degree.     §  454,  Pen.  Code 91 

Second  degree.     §  454,   Pen   Code 91 

Punishment  of.     §  455,   Pen.   Code 91 

Articles  of  incorporation. 

Filing  fee.     §  605,  Pol.  Code 22 

Changes  in,  filing  fee.     §  605,  Pol.  Code 22 

Must  be  filed  before  engaging  in  business.     §  607,  Pol.   Code 23 

Of  mutual  benefit  and  life  associations.     §  452a,  Civ.  Code 48 

Assessment. 

Of  companies  for  expenses  commissioner's  office.     §  606,  Pol.  Code 22 

Payable    on    demand.     §  634&,    Pol.    Code 36 

When  directors  may  assess  capital  stock.     §  331,  Civ.  Code ! 39 

Limitations  on.     §  332,  Civ.  Code 39 

Of  mutual  benefit  and  life  associations.     §  453,  Civ.  Code 48 

Assessment  associations.     (See  Life,  Health,  Accident  and  Annuity  or  Endow- 
ment Insurance  Companies  doing  business  on  the  assessment  plan.) 

Assessment  live  stock  associations,  or  corporations. 

Contract    defined.     §  1,    Act 105 

How  may  be  formed.     §  2,  Act 105 

Investments.      §  2,  Act 105 

Condition  precedent  to  issuing  insurance.     §  2,   Act 105 

What  contracts  shall  specify.     §  3,  Act 106 

Reserve  fund  required.     §  4,  Act _ 106 

Foreign  corporation,  conditions  required.       §  5,  Act 107 

Limitations   of   contract.     §  6,    Act 107 

Applications  for  insurance.     §  6,  Act 107 

Penalty  for  false  statements.     §  6,  Act 107 

Benefit  not  liable  to  attachment.     §  7,  Act 108 

Annual  statement  to  be  filed.     §  8,  Act 108 

When  license  may  be  revoked.     §9,  Act 108 

Assessments,  notice  of  to  be  mailed.     §  10,  Act 108 

Fees,  for  filing  statement,  etc.     §12,  Acl 109 

Expenses  of  insurance  commissioner  how  paid.     §  13,  Act 109 

Time  act  shall  take  effect.     §  14,  Act  __• 109 

Assets.     (See  Capital;  Capital  Stock.) 

Attorney  in  fact.     (See  Inter-insurance  Associations.) 

Attorneys.     (See  Agents;  Process;  Service  of  Process.) 

Attorney  General. 

Must  examine  all  documents.     §  596a,  Pol.  Code _ 15 

Opinion  of,  governs  commissioner.     §  596a,  Pol.  Code 15 

Proceedings  against  fraternal  benefit  societies.     §  25,   Act 119 

Authority.     (See  Certificate;  Certificate  of  Authority.) 

B 

Beneficiary  associations.     (See  Fraternal  Benefit  Societies.) 

Exempt  from  insurance  laws.     §  630,   Pol.   Code 35 

Boiler  and  machinery  insurance.     (See  Insurance  companies.) 

How  classified       §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code 18 

Bond.     (See  Sureties  and  Surety  Corporations;  Surplus  Line  Brokers.) 

Of  insurance  commissioner.     §  593,   Pol.   Code 7 

Surplus  line  broker.     §  596,  Pol.  Code —  13 

Of   insurance   company.     §  623,    Pol.   Code 32 

Fee  for  filing.     §  605,  Pol.  Code 22 

Renewal   of.     §  623,    Pol.    Code 32 

When  separate  bonds  must  be  given.     §  624,  Pol.  Code 32 

Justification  of  sureties.     §  955,  Pol.  Code 37 

Surety  company  may  be  accepted  as  sole  surety.     §  955,  Pol.  Code 37 

Surety  may  become  liable  for  less  than  full  penal  sum.     §  956,  Pol.  Code 37 

An  act  to  facilitate  the  giving  of,  required  by  law.     §§  1  to  4,  Act 96 


INDEX.  163 

PAGE. 

Broker.     (See  Surplus  Line  Broker;   Licenses;  Bond,   Surety  Corporations.) 
Building. 

Defined.     §  448,   Pen.    Code _ 91 

Inhabited,    defined.     §  449,    Pen.    Code 91 

Burglary  insurance  companies.     (See  Insurance  Companies.) 

How  classified.     §  594,   Pol.   Code 8 

Capital,    amount   of     §  594,    Pol   Code 9 

By-laws. 

Of  mutual  benefit  and  life  associations.     §  453,  Civ.  Code 48 

Amendments  to,  of  fraternal  benefit  societies.     §  22,  Act 117 

C 

Capital.     (See  Capital  Stock.) 

How  to  be  invested.     §  421,  Civ.  Code 40 

Time  to  be  paid  in.     §424,  Civ.  Code 42 

Fixed,  what  constitutes  a  deficiency  in.     §  439,  Civ.  Code 45 

Declaration  of  fixed,  to  be  filed.     §  440,  Civ.   Code P 45 

Capital  Stock.     (See  capital.) 

Amount  required  of  insurance  company.     §  594,   Pol.   Code 7 

Must  be  fully  paid  up.     §  594,  Pol.  Code 7 

Must  be  exclusive  of  liabilities.     §  594,  Pol.  Code 7 

Bonds  can  not  be  held  in  lieu  of  capital  stock.     §  594,  Pol.  Code  (note) 10 

Impairment  of.     §  602,   Pol.   Code 18 

Assessment  of,  on  insolvency.     §  604,  Pol.  Code 21 

Assessment  of,  when  directors  may  levy.     §  331,  Civ.  Code 39 

Limitation  on  assessment  of.     §  332,  Civ.  Code 39 

Subscription  to  and  how  collected.     §  414,  Civ.  Code 39 

Certificate  of  paid  up,  to  be  filed  and  when.     §  425,  Civ.  Code 42 

Amount  of,  of  mutual  life,  health  and  accident  insurance  companies.     §  437, 

Civ.  Code 44 

Certificate  of  increase  of,  to  be  filed  with  commissioner.     §  607,  Pol.  Code 23 

Cash   premiums. 

Mutual  fire  insurance  company.     §  8,  Act 103 

Casualty  insurance  companies.     (See  Insurance  companies;  miscellaneous  Insur- 
ance Companies.) 

Certificate.     (See  Licenses.) 

Fee  for  issuing.     §  605,  Pol.  Code 22 

of  unincorporated  companies.     §  607,    Pol.    Code 23 

Of  deposit.     §  619,  Pol.  Code 30 

Of  paid  up  capital  stock  to  be  filed  when.     §  425,  Civ.  Code 42 

Of  proof  of  loss,  when  dispensed  with.     §  2637,  Civ.  Code 71 

Certificate  of  authority.     (See  Licenses.) 

Company  must  procure.     §  596,  Pol.  Code 13 

Expires   when.     §  596,    Pol.    Code _ 13 

When  can  not  be  granted  or  renewed.     §596,  Pol.  Code 13 

Revocation  for  insolvency.     §  603,  Pol.  Code 20 

Commissioner  may  issue  new,  on  restoration.     §  603a,  Pol.  Code 21 

Fee  for  issuing  annual.     §  605,   Pol.  Code — _ 22 

Certificate  of  compliance. 

Must  be  filed  when.     §  607,  Pol.  Code ___  23 

Certified  copies.     (See  Copies.) 

Fee   for  making.     §  605,    Pol.   Code _ 22 

Charter. 

Copy  must  be  filed.     §  607,  Pol.  Code 23 

Civil  actions.     (See  Actions.) 

Parties    to.     §  383,    Code    Civ.    Pro ( 86 

Pleadings  in.     §  437a,  Code  Civ.  Pro . 86 

Compensation.  ■ 

Of  insurance  commissioner  and  deputy.     §  589,  Pol.  Code 6 

Compliance.     (See  Certificate  of  Compliance.) 


1 64  INDEX. 

Concealment  and  representations.  Page. 

What  is.     §  2561,  Civ.  Code 61 

Effect  of.     §2562,   Civ.   Code , 61 

What  must  be  disclosed.     §  2563,  Civ.  Code 61 

Matters  of  opinion  need  not  be  communicated.     §  2564,  Civ.  Code 61 

Materiality,  test  of.     §  2565,  Civ.  Code 61 

Matters,  each  party  is  bound  to  know.     §  2566,  Civ.  Code 62 

Waiver  of  communication  of  facts.     §  2567,   Civ.   Code 62 

Interest   of   insured.     §  2568,    Civ.    Code 62 

Intentional  omission,  fraudulent.     §  2569,  Civ.  Code 62 

Matters  of  opinion.     §  2570,  Civ.  Code 62 

Representation,  oral  or  written.     §  2571,  Civ.  Code 62 

Representation,    when    made.     §  2572,    Civ.    Code 62 

Representation,    how   interpreted.     §  2573,    Civ.    Code 62 

Representation,   as  to  future.     §  2574,  Civ.   Code 63 

Representation,  how  may  affect  policy.     §  2575,  Civ.  Code 63 

Representation,  may  be  withdrawn.     §  2576,  Civ.   Code 63 

Representation,  time  intended  by.     §  2577,  Civ.  Code '. 63 

Representation,   of  information.     §  2578,   Civ.   Code 63 

Representation,    when    deemed    false.     §  2579,    Civ.    Code 63 

Representation,    effect  of  falsity.     §  2580,   Civ.   Code 63 

Representation,  materiality  of,  how  determined.     §  2581,  Civ.  Code 63 

Provisions  as  to  modification.     §  2582,    Civ.   Code 64 

When  right  to  rescind  may  be  exercised.     §  2583,  Civ.  Code 64 

When  intentionally  false  insurer  may  rescind.     §  2676,   Civ.   Code 75 

Eventual  falsity  of,  as  to  expectation.     §  2677,  Civ.  Code 75 

Constitution.     (See  By-Laws.) 

Contracts.     (See  Policy.) 

Of    life,    health,    accident    and    annuity    or    endowment    insurance    on    the 

assessment  plan,  defined.     §  453d,  e.  g.  Civ.  Code 51,  52,  53 

Of   insurance.     §  2527,    Civ.    Code 56 

Designation  of  parties  in.     §  2538,  Civ.  Code 57 

Who  may  make.     §2539,  Civ.  Code 58 

Who  may  be  insured  under.     §  2540,  Civ.  Code 58 

Assignment  of  mortgage,  under.     §  2541,  Civ.  Code 58 

Transfer  of  insurance  from  a  mortgagor  to  a  mortgagee.     §  2542,  Civ.  Code__  58 

Right  to  rescind.     §  2583,  Civ.  Code 64 

Contingent  liability. 

Of  members  in  mutual  fire  insurance  companies.     §  4,  Act 102 

Copies. 

Fee  for  furnishing  copies  of  papers.     §  605,  Pol.  Code 22 

Fee  for  certifying  to  copies  of  papers.     §  605,   Pol.   Code 22 

Costs.     (See  Fees  and  Costs.) 

County  clerks. 

Insurance  commissioner  must  certify  to.     §  625a,  Pol.  Code 33 

County  fire  insurance  companies. 

Incorporation.     §  1,    Act 9' 

Articles   of  incorporation.     §  2,   Act 1 97_ 

Certificate.     §  2,   Act 9~ 

Directors,  number  of.     §  3,  Act 98 

Officers.     §4,  Act 98 

Bonds    and    officers.     §  5,    Act 98 

By-laws  and  powers.     §  6,  Act 

Membership.     §  7,  Act 98 

Risks.     §8,  Act " 

Risks,  classification  of.     §  9,  Act 

Risks,    limitation    upon.     §  10,    Act 

Losses,   adjustment  of.     §  11,  Act 


99 
100 


Deficiency,  assessment  for.     §  12,  Act 

Assessment,    notice    of.     §  13,    Act 


Assessment,  neglect  or  refusal  to  pay.     §  14,  Act 

Annual  statement.     §  15,  Act 

Withdrawal  of  member.     §16,  Act 101 


100 
101 


INDEX.  165 

County  fire  insurance  companies — Continued.  Page. 

Report  of  officer.     §  17,   Act 101 

Dissolution.      §  18,    Act w  101 

Conflicting  laws  repealed.     §  19,  Act 101 

Credit   insurance  companies.     (See  Insurance  Companies.) 

How  classified.     §  594,  Pol.  Code 8 

Capital,  amount  of.     §  594,  Pol.  Code ,1  8 

Insolvent,    when.     §  602,    Pol.    Code 18 

Crimes.     (See  Penalty;  Arson.) 

Commissioner  must  certify  facts  to  district  attorney.     §  632,  Pol.  Code '__  35 

Against  property.     §§  447  to  455  and  548,  549,  Pen.  Code 90,  91,  92 

Carrying  on  business  without  license.     §435,  Pen.  Code 90 

Insurance  in  unauthorized  companies.     §  439,   Pen.   Code 90 

Arson,  defined.     §  447,  Pen.  Code 90 

Cyclone  insurance.     (See  Miscellaneous  Insurance  Companies.) 

D 

Definition. 

Of    authorized    companies.     §  596,    Pol.    Code 13 

Of  word  "company."      §  634a,  Pol.  Code 37 

Of    building.     §  448,    Pen.    Code 91 

Of   inhabited   building.     §  449,    Pen.    Code 91 

Of   night   time.     §  450,    Pen.    Code 91 

Of   burning.     §  451,    Pen.    Code 91 

Of   insured.     §  1,    Act 129 

Of    loss.     §1,     Act 129 

Of  time  of  loss  or  damage.     §  1,  Act 129 

Deposit   by  foreign   companies. 

Amount    required.     §  594,    Pol.    Code . 7 

Kind  of  securities.     §  594a,    Pol.   Code;    §421,    Civ.   Code 10,  40 

With   what   official.     §  594a,    Pol.    Code 10 

Existence,    how   certified.     §  594,    Pol.    Code 10 

Value   of   securities.     §  594a,    Pol.   Code 10 

For    whose    benefit.     §  594a,    Pol.    Code 10 

How  deposited  with  insurance   commissioner.     §  594«,    Pol.    Code 10 

How    withdrawn.     §  594a,    Pol.    Code 10 

Certificate   of   deposit.     §  594a,    Pol.    Code 10 

Fee  for  issuing  certificate  of.     §  605,   Pol.   Code 22 

Fee  for  filing  certificate.     §  605,  Pol.  Code i  —  22 

Deposit. 

Fee  for  issuing  certificate  of.     §  605,   Pol.   Code 22 

Fee  for  filing  certificate.     §  605,  Pol.  Code 22 

General  provisions   as   to.     §  618,   Pol.   Code 29 

Of  mortgages,  how  made.     §  618,  Pol.  Code 29 

Of  stocks  and  bonds,  fees  for  appraisal  of.     §  618,  Pol.  Code 29 

Certificate    of.     §  619,    Pol.    Code 30 

Withdrawal  of,  how  made.     §  620,  Pol.  Code 30 

Under   retaliatory   law.     §  622,    Pol.    Code 31 

For  benefit  of  registered  policies.     §  634,   Pol.   Code 36 

Deputy   insurance  commissioner. 

Salary  of.     §  589,   Pol.   Code 6 

Deviation.     (See  Voyage;  Marine  Insurance.) 

Is  proper  when.     §  2695,   Civ.  Code 77 

Is  improper  when.     §  2696,   Civ.   Code 77 

Insurer  is  exonerated  by  improper.     §  2697,   Civ.   Code 77 

From  standard  form  of  policy.     §  12,  Act ■. 131 

Notwithstanding,     policy    valid.     §  12,    Act 131 

Directors. 

Liable  for  loss  on  insurance  when.     §  418,  Civ.  Code ;i.  40 

Liable  on  what  policies.     §  418,  Civ.  Code '_  40 

Distribution. 

Of  annual  report.     §595,  Pol.  Code  (note) 12 


166  INDEX. 

District  attorney.  Page. 

Commissioner  must  certify  violations  of  law  to.     §  632,  Pol.  Code 35 

Dividends. 

Directors  must  make,  when.     §  417,  Civ.  Code 40 

What  not  to  be  treated  as.     §  417,  Civ.  Code 40 

Amounts  to  be  reserved  before  making.     §  429-430,  Civ.  Code 43 

Of  title  companies.     §  432,  Civ.   Code 43 

Of  mutual  life,  health  and  accident  insurance  companies.     §  452,  Civ.  Code—  48 

Double  insurance. 

What    is.     §  2641,    Civ.    Code ■      72 

Contribution   in   case   of.     §  2642,    Civ.    Code 72 

E 

Endowment  insurance  companies  doing  business  on  the  assessment  plan.  (See 
Life,  Health,  Accident  and  Annuity  Insurance  Companies  Doing  Business 
on  the  Assessment  Plan.) 

Equalization,   state   board   of. 

Insurance  commissioner  must  report  to.     §  11,  Act 143 

Time  of  meeting  of.     §  18,  Act 1 147 

Protest    of    taxes    to.     §  23,    Act 151 

Powers    and    duties    of.     §  25,    Act : 154 

Must  equalize  assessments  of  real  estate  of  insurance  companies.     §  27,  Act  155 

Examination. 

Commissioner    must    make.     §§  595,    597,    Pol.    Code 11,  15 

Expenses  of,   how  paid.     §  597,   Pol.   Code 15 

Commissioner  must  keep  statement.     §  600,   Pol.   Code 17 

Annual,  of  securities  deposited.     §  621,  Pol.  Code 31 

Of  domestic  fraternal  benefit  societies.     §  24,  Act 119 

Of  foreign  fraternal  benefit  societies.     §  25,  Act 119 

Examining    physician.     (See   Physician.) 

Exchange   of    Indemnity.     Act 122 

Expense.     (See  Insurance  Commissioner.) 

Of  examinations,   how  paid.     §  597,   Pol.   Code 15 

Of  insurance  commissioner  to  be  paid  by  companies,  when.     §  606  Pol.  Code_  22 

Experts.     Commissioner  may  employ  when.     §  597,  Pol.  Code 15 

F 

Federal  courts.     Actions  not  to  be  transferred  to.     §  608,  Pol.  Code 23 

Fees  and  costs. 

Surplus  line  brokers.     §  596,    Pol.    Code 13 

For  filing  annual  statement.     §  605,  Pol.  Code 22 

For  filing  articles  of  incorporation.     §  605,  Pol.  Code 22 

For  filing  changes  in  articles  of  incorporation.     §  605,  Pol.  Codel 22 

For  filing  bond  of  company.     §  605,  Pol.  Code 22 

For  filing  appointment  of  agent  and  stipulation.     §  605,  Pol.  Code 22 

For  filing  stipulation.     §  605,   Pol.   Code 22 

For  filing  certificate  of  deposit  of  securities.     §  605,  Pol.  Code 22 

For  furnishing  copies  of  papers.     §  605,  Pol.  Code 22 

For  certifying  copies.     §  605,  Pol.  Code 22 

For  issuing  certificate  of  deposit  of  securities.     §  605,  Pol.  Code 22 

For  registering  policies  of  life  insurance.     §  605,  Pol.  Code 22 

For  issuing  annual  certificate  of  authority.     §  605,  Pol.  Code 22 

For  issuing  annual  license  to  agents.     §  605,  Pol.  Code 22 

For  attaching  seal  to  paper  not  specified.     §  605,  Pol.  Code 22 

For  issuing  other  certificates.     §  605,   Pol.   Code ! 22 

Of   secretary   of    state.     §  409,    Pol.    Code 132 

Payments  must  be  made  on  basis  of  gold  coin.     §  627,  Pol.  Code 33 

Fidelity  insurance  companies.     (See  Insurance   companies.) 

How  classified.     §  594,  Pol.   Code__ 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,   Pol.   Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 


INDEX.  167 

Financial    statement.     (See   Annual    Statement.)  Page. 

Fine.     (See  Penalty.) 

For  failure  to  file  annual  statement.     §  617,  Pol.  Code 29 

Fire  insurance. 

Alteration  without  consent.     §  2753,  Civ.  Code 84 

Alteration  not  increasing  risk.     §  2754,  Civ.  Code 84 

Subsequent   acts   of  insured.     §  2755,    Civ.    Code 84 

Measure  of  indemnity  defined.     §  2756,  Civ.  Code 84 

Policy,   value   of  interest   in.     §  2757,    Civ.    Code 84 

Value  of  insured's  interest,  how  may  be  fixed.     §  2757,  Civ.  Code 84 

Fire  insurance  companies.     (See  Insurance  Companies;  Mutual  Fire  Insurance 
Companies;  Foreign  Insurance  Companies;  Standard  Policy  of.) 

How  classified.     §  594,  Pol.  Code 7 

Capital,  amount  of.     §  594,  Pol.   Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Capital  to  be  paid  up,  how  and  when.     §  424,  Civ.  Code 42 

Property  which  may  be  insured.     §  426,  Civ.  Code 42 

Limitation  on  risks.     §  428,  Civ.  Code 43 

Dividends,  amount  to  be  reserved  before  making.     §§  429-430,  Civ.  Code 43 

Fire    patrol. 

Duties  and  powers  of  underwriters.     §  453a,  Civ.  Code 49 

Rights  of  way  of  and  its  officers.     §  453b,  Civ.  Code 49 

Abandonment  of  building.     §  453a,   Civ.   Code 49 

Assessment  to  maintain.     §  453c,  Civ.   Code 50 

Expenses  of,  limit  upon.     §  453c,   Civ.  Code 50 

Fire    insurance    companies,    may   maintain.     §  453a,    Civ.    Code 49 

Injuries   to   property   of.     §  453b,    Civ.   Code 49 

Laws  affecting  fire  department  apply  to.     §  453b,   Civ.   Code 49 

Maintenance  of,   statement  of  premiums.     §  453c,   Civ.    Code_ 50 

Meeting    of.     §  453c,     Civ.     Code 50 

Obstruction  of,  on  way  to  fire,  punishment.     §  453b,  Civ.  Code 49 

Power  to  enter  building  and  take  property.     §  453a,  Civ.  Code '  49 

Regular  fire  department  not  to  be  interfered  with.     §  453a,  Civ.  Code 49 

Right   of   way   while   running   to    fires.     §  453b,    Civ.    Code 49 

Underwriters    may    maintain.     §  453a,    Civ.     Code 49 

Fire   underwriters.     (See  Fire   Patrol.) 

Fly  wheel  insurance.     (See  Insurance  Companies.) 

Foreign  insurance  companies.     (See  Taxes,  Deposit  and  Insurance  Companies.) 

Deposits    by.     §  594a,    Pol.    Code 10 

Examination    of.     §  597,    Pol.    Code 15 

Withdrawal  of.     §  595,  Pol.  Code 11 

Statement  of,   how  verified.     §  610,   Pol.   Code 24 

Forfeiture.        (See  Penalty.) 

Forms. 

Commissioner  must  prepare  and  furnish.     §  615,  Pol.  Code 27 

Fraternal    benefit   societies. 

Exempt  from  insurance  laws.     §  630,   Pol.   Code.   §  4,  Act 35,  110 

Exempt   from   taxation.     §  30,    Act 121 

Defined.     §  1,    Act u 109 

Lodge   system,    defined.     §  2,    Act , 109 

Representative  form  of  government,  defined.     §  3,  Act 109 

Benefits   of.     §5,   Act 110 

Beneficiaries.     §6,    Act ! 110 

Membership,    qualifications    for.     §  7,    Act 111 

Certificates  of  membership.     §  8,  Act 111 

Funds  of.     §9,  Act 111 

Investments    of.     §  10,    Act 112 

Funds  of,   distribution  of.     §  11,  Act 112 

Organization    of.     §12,    Act 112 

Powers  retained  by  societies  now  in  business.     §  13,  Act 114 

Mergers  and  transfers.     §  14,  Act 114 


168  INDEX. 

Fraternal    benefit   societies — Continued.  Page. 

Licenses,  annual.     §15,   Act , 115 

Admission    of   foreign    societies.     §  16,    Act 115 

Power  of  attorney  to  insurance  commissioner.     §  17,  Act 116 

Service    of   process    on.     §  17,    Act 116 

Place   of   meeting-  of.     §  18,   Act 116 

No  personal  liability  of  officers  or  members.     §  19,   Act 116 

Subordinate  lodge  can  not  waive  laws.     §  20,  Act 116 

Benefits    not    attachable.     §  21,    Act 116 

Amendments    to   constitution   and  laws.     §  22,   Act 117 

Reports    of.     §23,    Act 117 

Valuation  of  policies  of.     §  23a,   Act 118 

Examinations    of.     §§  24,     26,    Act 118 

Publication  of  findings.     §  27,   Act 120 

Revocation   of   license   of.     §  28,    Act 120 

"What  societies  are   exempt.     §  29,   Act 120 

Taxation    of.     §  30,    Act 121 

Penalties  for  violation  of  laws  relating  to.     §  31,  Act 121 

Fraud. 

Breach  of  warranty  without.     §  2612,   Civ.   Code 68 

Premiums   returned   for.     §  2619,    Civ.    Code 69 

Relieves   insurer.     §2629,    Civ.    Code 70 

Freightage.     (See  Marine  Insurance.) 

What   is.     §  2661,    Civ.    Code 74 

Expected.     §  2662,  Civ.  Code 74 

Interest  in,  what.     §2663,   Civ.   Code 74 

How  affected  by  abandonment  of  ship.     §  2730,  Civ.  Code 81 

Funds.     (See  Investments.) 

G 

General  agents.      (See  Agents,  General.) 

Appointment  of,   to  be  filed.     §616,  Pol.  Code 2S 

Governor  of  State. 

Insurance  commissioner  is  appointed  by.     §  368,   Pol.  Code 5 

Term  of  office  of  appointees  of.     §  369,   Pol.   Code 5 

Insurance  commissioner  must  make  annual  report  to.     §  595,  Pol.  Code 11 


Health,  accident  and  annuity  or  endowment  insurance  companies  doing  business 
on  the  assessment  plan.  (See  Life,  Health  and  Accident  and  Annuity  or 
Endowment  Insurance  Companies  Doing  Business  on  the  Assessment 
Plan.) 

Health  insurance  companies.  (See  Accident  and  Health  Insurance  Companies; 
Mutual  Life   Insurance   Companies.) 


Implied  warranties.     (See  Warranties.) 

Increase.     (See  Capital  Stock.) 

Indemnity.     (See  Measure  of  Indemnity.) 

Information.     (See  Marine  Insurance.) 

Must   be   communicated.     §  2669,    Civ.    Code 74 

Material.     §  2670,    Civ.    Code 74 

Presumed  to   have  had  knowledge.     §  2671,    Civ.    Code 75 

Injunction. 

Attorney  general  must  bring  suit  for.     §  25,  Act 119 

Inland  navigation   insurance  companies.      (See  Insurance  Companies.) 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

When    insolvent.     §  602,    Pol.    Code IS 


INDEX.  169 

Insolvency.  Page. 

Commissioner  must  examine   companies.     §  597,   Pol.   Code 15 

When  companies  are.     §  602,   Pol.  Code 18 

Revocation  of  certificate  of  authority.     §  603,  Pol.  Code 20 

Company  may  repair  capital.     §  603a,  Pol.  Code 21 

Commissioner  must  certify  to  attorney  general.     §  604,  Pol.  Code 21 

Procedings   on.     §  604,    604a,    Pol.    Code 21,  22 

Receiver  may  reinsure  business.     §  604,  Pol.   Code 21 

Who  may  commence  proceedings.     §  604,  Pol.  Code 21 

Laws  applicable.     §  604a,  Pol.  Code 22 

of  fraternal  benefit  societies.     §  24,  Act _ 119 

Insurance  in  general.  (See  Concealment;  Representation;  Policy;  Warranties; 
Premium;  Loss;  Notice  of  Loss;  Reinsurance;  Double  Insurance;  Insurance 
Companies.) 

What    is.     §  2527,    Civ.    Code 56 

What  may  be  insured.     §  2531,   Civ.   Code 57 

Of  lottery  unauthorized.     §  2532,   Civ.   Code 57 

Usual  kinds   of.     §  2533,    Civ.   Code 57 

Code  provisions  govern  all  kinds  of.     §2534,   Civ.   Code _ 57 

Defining  insurer  of.     §  2538,    Civ.    Code 57 

Who   may  insure.     §  2539,   Civ.    Code 58 

Who  may  be  insured.     §  2540,  Civ.  Code 58 

On   mortgaged  property.     §  2541,    Civ.    Code 5S 

By  mortgagor.     §  2542,  Civ.  Code 58 

Insurance  commissioner. 

How  appointed.     §  368,  Pol.  Code 5 

Term  of  office.     §  369,   Pol.  Code 5 

Who  are  eligible.     §  588,   Pol.   Code 6 

Salary  of,   and   deputy.     §  589,    Pol.    Code 6 

Rooms  and  expense.     §  591,  Pol.  Code 6 

Location   of   office.     §  592,    Pol.    Code 7 

Bond    of.     §593,    Pol.    Code 7 

Duties   of.     §  595,    Pol.    Code 11 

Annual  Report  of.     §  595,  Pol.  Code 11 

How  distributed.     §  595,  Pol.   Code 11 

Examination  of  companies.     §§  595,  597,  Pol.  Code 11,  15 

Where    conducted.     §  597,    Pol.    Code _ 15 

May  employ  experts  to  rewrite  books.     §  597,  Pol.  Code 15 

Must  furnish  information  to  policyholder.     §  598,  Pol.  Code 16 

May  supoena  witnesses.     §  599,  Pol.  Code 17 

Must  keep  record  of  proceedings.     §  600,  Pol.  Code 17 

May  employ  actuary.     §  601,   Pol.   Code 17 

Must  revoke  certificate  of  insolvent  companies.     §  603,  Pol.  Code 20 

Must  report  insolvency  to  attorney  general.     §  604,  Pol.  Code 21 

May  assess   companies.     §  606,    Pol.    Code 22 

May  reject  name  of  company.     §  609,  Pol.  Code 24 

Must  furnish  printed  forms  of  annual  statement.     §  615,  Pol.  Code 27 

Service  of  process  upon.     §  616,  Pol.  Code 28 

Must  deposit  securities  in  state  treasury.     §  618,  Pol.  Code 29 

Must  issue  certificate  of  deposit.     §  619,  Pol.  Code 30 

Must  furnish  information  to  assessors.     §  625,   Pol.  Code 33 

Must  certify  list  of  surety  companies  to  county  clerk.     §  625a,  Pol.  Code 33 

Must  require  compliance  with  general  corporation  laws.     §  626,   Pol.  Code —  33 

Acts  may  be  reviewed  by  court.     §  631,  Pol.  Code 35 

Must  publish  notice  of  withdrawal  of  companies.     §  631a,  Pol.  Code 35 

Must  certify  violations  of  law  to  district  attorney.     §  632,  Pol.  Code 35 

Must  keep  alphabetical  list  of  agents  and  solicitors.     §  633,  Pol.  Code 36 

May  commence  actions  for  recovery  of  fines,  etc.     §  634&,   Pol.   Code 37 

What  must  report  to  state  board  of  equalization.     §  11,  Act 143 

Insurance  companies.     (See  under  appropriate  titles.) 

Classification    of.     §  594,    Pol.    Code - 7 

Certificate  of  authority   of.     §  596,    Pol.    Code 13 

Withdrawal  of,   from   state.     §  595,    Pol.    Code '. 11 

Examination  of.     §§  595,   597,  Pol.  Code 11,  15 

Authorized,  denned.     §  596,  Pol.  Code 13 


170  INDEX. 

Insurance     companies — Continued.  Page. 

Expense   of  organizing.     §  597,    Pol.    Code 15 

Must  furnish  information  to  policyholder.     §  598,  Pol.  Code 16 

Insolvency    of.     §  602,    Pol.    Code 18 

Revocation  of  certificate  of  authority.     §  603,  Pol.  Code 20 

May  repair  capital.     §  603a,  Pol.  Code 21 

Proceedings  before  judgment.     §  604,  Pol.  Code 21 

Assessment  for  expenses  by  commissioner.     §  606,  Pol.  Code 22 

Certificate    by    unincorporated    companies.     §  607,    Pol.    Code 23 

Must  submit  name  to  commissioner.     §  609,  Pol.  Code 24 

How   statements   and  reports   are  verified.     §  610,    Pol.   Code 24 

Must  file  annual  statements.     §  611,  Pol.  Code 24 

What  annual  statement  of  companies  other  than  life  must  show.     §  612,  Pol. 

Code    24 

What  annual  statement  of  life  companies  must  show.     §  613,  Pol.  Code 26 

Mutual,  under  act  of  1851,  may  report  how.     §  614,  Pol.  Code 27 

Must  appoint  general  agent.     §  616,  Pol.  Code 28 

Must  file  stipulation  for  service  of  papers.     §  616,  Pol.   Code 28 

Deposit  of  securities  by.     §  618,  Pol.  Code 29 

Withdrawal  of  deposit  by.     §  620,  Pol.  Code 30 

Deposits   under  retaliatory  law.     §  622,    Pol.    Code 31 

Taxation  of.     §  622a,  Pol.  Code 31 

Bond  to  be  filed  by.     §  623,  Pol.  Code » 32 

Must  give  separate  bonds,  when.     §  624,  Pol.  Code__ 32 

Companies  must  comply  with  general  corporation  laws.     §  626,  Pol.  Code 33 

Companies  must  furnish  data  for  violation  of  life  policies.     §  629,  Pol.  Code 34 

Publication  of  notice  of  withdrawal.     §  631a,    Pol.   Code 35 

Deposits  for  registered  policies.     §  634,   Pol.   Code 36 

Rate    of    taxes.     §  3,    Act 136 

Policies  of,  how  issued  and  by  whom  signed.     §  416,  Civ.  Code 40 

How  capital  and  accumulations  may  be  invested.     §  421,  Civ.  Code 40 

Insurance  companies   other   than    life.     (See   Insurance   Companies.) 

What  annual  statement  must  show.     §  612,  Pol.  Code 24 

Insurance   corporations.     (See  Insurance   Companies.) 

Insurable  Interest.     (See  Insurance  in  General.) 

What   is.     §  2546,    Civ.    Code 59 

What    may    consist.     §  2547,    Civ.    Code 59 

Of  carrier  or  depositary.     §  2548,   Civ.  Code 59 

Mere    expectancies.     §2549,    Civ.    Code 59 

Measure    of,    in    property.     §  2550,    Civ.    Code 59 

Insurance   without,    illegal.     §  2551,    Civ.   Code 59 

When  must  exist.     §  2552,   Civ.   Code 60 

Effect  of  transfer.     §  2553,  Civ.  Code 60 

Transfer  of,  after  loss.     §  2554,  Civ.  Code 60 

Exception  in  case  of  several  subjects  in  one  policy.     §  2555,  Civ.  Code 60 

In  case  of  death  of  insurer.     §  2556,   Civ.   Code 60 

In  case  of,  between  co-tenants.     §  2556,  Civ.  Code 60 

Policy  when  void.     §  2558,   Civ.   Code 60 

Inter-insurance  associations. 

Who  may  exchange  indemnity.     §  1,  Act 122 

Limit  of  liability  on   risk.     §  1,   Act 122 

May   appoint  attorney  in   fact.     §  2,   Act 122 

Papers  to  be  filed  by  attorney  in  fact.     §  2,  Act 122 

Stipulation,    form    of.     §  2,    Act 122 

Statement  to  be   filed.     §  2,   Act 123 

Certificate   of   authority.     §  3,    Act 123 

Fee    for    issuance    and    renewal.     §  3,    Act 123 

Annual     statement.     §  4,     Act 123 

Commissioner   must   examine   association.     §  5,   Act 123 

Unauthorized    contract   void.     §  7,    Act 124 

Taxation   of.     §  8,   Act   124 

Exempt  from  other  insurance  laws.     §  9,  Act 124 


INDEX.  171 

Investments.     (See  Capital.)  Pagk. 

To  be  reported  to  commissioner.     §  421,  Civ.  Code 40 

Of    title    insurance    companies.     §  432,    Civ.    Code 43 


Joint   stock   and   mutual    insurance   companies. 

Must  have  assets  in  lieu  of  capital  stock.     §  594,  Pol.  Code 7 

L 

Liability  insurance  companies.     (See  Insurance  Companies.) 

How    classified.     §  594,     Pol.     Code : 7 

Capital,    amount    of.     §  594,    Pol.    Code 7 

May  do  other  kinds  of  insurance.     §  594,   Pol.   Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Reserve   required.     §  602a,   Pol.    Code 18 

Licenses.     (See  Certificate  of  Authority;  License  Periods.) 

Surplus    line    broker.     §  596,    Pol.    Code 13 

Surplus  line  broker,  revocation  of.     §  596,  Pol.  Code 13 

Of  surplus  line  broker  can  not  issue  when.     §  596,  Pol.  Code 13 

Of  agents  and  solicitors.     §  633,   Pol.   Code 36 

Fee  for  annual  license  to  agents  and  solicitors.     §  605,  Pol.  Code 22 

Transaction  of  business   without.     §  435,    Pen.    Code 90 

Procurement  of  business  for  unlicensed  foreign  companies  unlawful.     §  439, 

Pen.     Code 90 

License  periods. 

Of  broker,  from  July  1st  to  July  1st.     §  596,  Pol.  Code 13 

Of  insurance  companies  from  July  1st  to  July  1st.     §  596  Pol.  Code 13 

Of  agents  and  solicitors  from  July  1st  to  July  1st.     §  633,  Pol.  Code 36 

Of  fraternal  societies  from  July  1st  to  July  1st.     §  15,  Act 115 

Life,    health,    accident    and    annuity   or   endowment    insurance    companies   doing 
business  on  the  assessment  plan. 

Contracts  which  may  be  made  by,  denned.     §  453d,  Civ.  Code 51 

Application,   contract  to  be  founded  on.     §  453;,   Civ.  Code 54 

Articles  of   incorporation,    filing  of.     §  453e,    Civ.    Code 52 

Benefit  societies  exempt  from  provisions  of.     §  453p,  Civ.  Code ■_  56 

Bonds  or  security,  deposits  with  state  treasurer.     §  453e-ft,  Civ.  Code 52,  53 

Business,  compliance  with  Political  Code.     §  453e,   Civ.  Code 52 

Business  to  be  commenced  within  one  year.     §  453e,  Civ.  Code 52 

Certificate  of  insurance  commissioner.     §  453e,  Civ.  Code 52 

Contract  of,  defined.     §  453d,  Civ.  Code ^ 51 

Contracts,  membership  and  capital  required.     §  453e,  Civ.  Code 52 

Contracts,  what  to  specify.     §  453a,  Civ.  Code 53 

Corporations  to  carry  on,   law  governing.     §  453e,   Civ.   Code 52 

Discontinuance  of  business.     §  453ft,  Civ.  Code 53 

Exempt,  money  obtained  from  corporation  is.     §  453fc,  Civ.  Code 54 

False  statements  to,  punishment  for.     §  453.?',  Civ.  Code 54 

Fees,   amount  and  disposition  of.     §  453w,  Civ.   Code 55 

Foreign  coi-porations,  conditions  of  doing  business.     §  453i,  Civ.  Code 53 

Foreign  corporations,  license  to  issue  when.     §  453i,  Civ.   Code 53 

Fraternal  societies  exempt  from  provisions  of.     §  453p,  Civ.  Code 56 

Insurance  commissioner,  duty  to  examine  into.     §  453Z,  Civ.  Code 55 

Insurance  commissioner,  expenses,  allowance  and  payment  of.     §  453o,  Civ. 

Code 56 

Insurance  commissioner,  proceedings  by  against.     §  453Z,  Civ.  Code 55 

Investment  of  funds.     §  453e,  Civ.  Code 52 

Lapsing  of  policies,  notices.     §  453m,  Civ.  Code 55 

Lien  on  property  of,  indebtedness  on  contract  is.     §  453fr,  Civ.  Code 53 

Name  of.     §  453e,   Civ.   Code 52 

Organization  within  one  year.     §  453e,  Civ.  Code 52 

Payment,  time  and  effect  of  failure  to  pay.     §  453#,  Civ.  Code 53 

Penalties,  disposition  of.     §  453rt,  Civ.   Code 55 

Preexisting  corporations,   rights   of.     §  4537%   Civ.   Code 52 


172  INDEX. 

Life,    health,    accident,    etc.    companies — Continued.  Page. 

Priority  of  indebteddness  under  contract.     §  453-r/,  Civ.  Code 53 

Reserve  and  emergency  fund,  disposition  of.     §  4537i,  Civ.  Code 53 

Reserve  and  emergency  fund  to  be  created.     §  4537i,  Civ.  Code 53 

Revocation  of  power  to  do  business.     §  4537,  Civ.  Code 55 

Secret  societies  exempt  from  statute.     §  453p,  Civ.  Code 56 

Statements  to  be  filed  annually.     §  4537,  Civ.  Code 55 

Life  and   health   insurance.     (See  Insurance  in  General.) 

Upon  life  when  payable.     §  2762,   Civ.   Code 85 

Insurable  interest,   extent  of.     §  2763,  Civ.   Code 85 

Assignee,  interest  of.     §  2764,  Civ.  Code 85 

Transfer    of    policy.     §  2765,    Civ.    Code 85 

Defining  measure  of  indemnity.    .§  2766,  Civ.  Code • 85 

Life  insurance  companies.     (See  Insurance  Companies.) 

How    classified.     §  594,     Pol.     Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

What  annual  statement  must  show.     §  613,   Pol.   Code 26 

Lightning  insurance  companies.     (See  Insurance  Companies.) 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Limitations.     (See  Risk.) 

On  risk  of  fire  and  marine  insurance  companies.     §  428,   Civ.   Code 43 

On  risk  taken  by  county  fire  insurance  companies.     §  8,  10,  Civ.  Code 99 

Live  stock  insurance  companies.     (See  Miscellaneous  Insurance  Companies.) 

Lodge  system.     (See  Fraternal  Benefit  Societies.) 

Loans. 

On    policies.     §  421,    Civ.    Code 40 

Loss.     (See  Notice  of  Loss.) 

What  perils  are   insured  against.     §  2626,   Civ.   Code 70 

Incurred  in  rescuing  from  peril.     §2627,  Civ.  Code 70 

Perils   excepted.     §  2628,   Civ.    Code 70 

Negligence  does  not  exonerate  insurer.     §  2629,  Civ.  Code 70 

May  be  total  or  partial.     §  2701,   Civ.   Code 78 

When  not  total  is  partial.     §  2702,  Civ.  Code 78 

May  be  actual  or  constructive.     §  2703,   Civ.   Code 78 

Actual    total.     §  2704,    Civ.    Code 78 

Constructive    total.     §  2705,     Civ.     Code 78 

Presumed.     §  2706,   Civ.   Code 78 

Upon  actual  total — insured  entitled  to  payment  without  notice  of  abandon- 
ment.     §  2709,    Civ.    Code 79 

Average.     §  2711,   Civ.   Code 79 

Insurance   against   total.     §  2712,    Civ.    Code 79 

How  marine  insurer  is  liable  upon  partial.     §  2737,  Civ.  Code 82 

Estimating,    under  open   policy.     §2741,    Civ.    Code 82 

When  vessel  is  insured  against  partial.     §  2742,  Civ.  Code 83 

General    average.     §  2744,    Civ.    Code 83 

In  case  of  a  partial.     §  2746,   Civ.  Code S3 

Total  or  partial.     §  2757,  Civ.  Code 84 

Adjustment  of,  county  fire  insurance  companies.     §  11,  Act 99 

M 
Machinery  insurance.     (See  Boiler  and  Machinery  Insurance  Companies.) 
Marine  insurance  companies.     (See  Insurance  Companies.) 

How  classified.     §  594,  Pol.   Code 7 

Capital,    amount  of.     §  594,    Pol.    Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code IS 

Capital  to  be  paid  up,  how  and  when.     §  424,  Civ.   Code 42 

Property  which  may  be  insured.     §  426,  Civ.  Code 42 


INDEX.  173 

Marine     insurance     companies— Continued.  Page. 

Limitation  on  risks.     §  428,  Civ.  Code 43 

Dividends,  amounts  to  be  reserved  before  making.     §§  429-430,  Civ.  Code 43 

What    is.     §  2655,    Civ.    Code 73 

Owner  of  ship  has  insurable  interest  at  all  times.     §  2659,  Civ.  Code 73 

Insurable  interest  of  owner  reduced  by  bottomry.     §  2660,  Civ.  Code 74 

Freightage,  what  is.     §  2661,   Civ.   Code 74 

Owner  has  insurable  interest  in  expected  freightage.     §  2662,  Civ.  Code 74 

Interest  in  expected  freightage  what  is.     §  2663,  Civ.  Code ri  74 

Insurable  interest  in  profits,  what  is.     §  2664,   Civ.   Code 74 

Insurable  intei-est  of  charterer.     §  2665,  Civ.  Code 1 74 

Information  by  each  party  must  be  communicated.     §  2669,  Civ.  Code 74 

Information  of  the  belief  or  expectation  of  a  third  person.     §  2670,  Civ.  Code  74 

Presumption  of  knowledge  of  loss.     §  2671,  Civ.  Code 75 

Concealment,    effect  of.     §  2672,    Civ.    Code 75 

Concealments,   various  kinds.     §  2672,   Civ.   Code 75 

Representation   intentionally.     §  2676,    Civ.    Code 75 

Eventual  falsity  of  representation  as  to  expectation.     §  2677,  Civ.  Code 75 

Implied  warranty  that  ship  is  seaworthy.     §  2681,   Civ.   Code 75 

Seaworthiness,    what   is.     §  2682,    Civ.    Code 75 

Seaworthiness,    exists   when.     §  2683,    Civ.    Code 76 

Seaworthiness,   requisites   required.     §  2684,   Civ.   Code 76 

Seaworthiness,  degrees  of  at  different  states  of.     §  2685,  Civ.  Code 76 

Unseaworthiness   during   voyage.     §  2686,    Civ.    Code 76 

Ship   seaworthy  may  at  times  be  unseaworthy.     §  2687,    Civ.    Code 76 

Ship  to  carry  requisite  documents.     §  2688,   Civ.   Code 76 

Voyage  must  conform  to  course  fixed  by  mercantile  usage.     §  2692,  Civ.  Code  77 

Course  when  not  fixed  by  mercantile  usage.     §  2693,  Civ.  Code 77 

Course  of  voyage,  deviation  in.     §  2694,  Civ.  Code 77 

Course  when  proper.     §  2695,  Civ.  Code 77 

Course  when  improper.     §  2696,  Civ.  Code 77 

Insurer,    exonerated   when.     §  2697,   Civ.    Code 77 

Total  and  partial  loss.     §  2701,  Civ.   Code t 78 

Partial   loss,    what   is.     §  2702,    Civ.    Code 78 

Actual  and  constructive  total  loss.     §  2703,  Civ.  Code 78 

Actual  total  loss,   what  is.     §  2704,   Civ.  Code 78 

Constructive  total  loss,  what  is.     §  2705,  Civ.  Code 78 

Presumed  total  loss,  what  is.     §  2706,  Civ.  Code 78 

When   master  must  transfer  cargo.     §  2707,  Civ.   Code 78 

Insurer,  bound  for  damages  when  cargo  is  transferred.     §  2708,  Civ.  Code 79 

Infeurer  is  entitled  to  payment  upon  actual  total  loss.     §  2709,  Civ.  Code 79 

Average   loss.     §  2711,    Civ.   Code 79 

When  confined  in  terms  to  an  actual  total  loss.     §  2712,  Civ.  Code__ 79 

Abandonment,  what  is.     §  2716,  Civ.  Code 79 

Insured  may  abandon  when.     §  2717,   Civ.   Code 80 

Abandonment  must  neither  be  partial  nor  conditional.     §  2718,  Civ.  Code 80 

Abandonment  when  it  may  be  made.     §  2719,  Civ.  Code 80 

Abandonment  how  becomes  ineffectual.     §  2720,  Civ.  Code 80 

Abandonment    how    made.     §  2721,    Civ.    Code 80 

Abandonment  requisites  of  notices  of.     §  2722,   Civ.   Code 80 

Sustained  only  upon  cause  specified.     §  2723,  Civ.  Code 

Abandonment  equivalent  to  transfer.     §  2724,  Civ.  Code 

Insurer  entitled  to   salvage,   when.     §  2725,    Civ.    Code 

Agents  of  the  insured  become  agents  of  the  insurer.     §  2726,  Civ.  Code 

Abandonment,   acceptance  of  not  necessary.     §  2727,   Civ.   Code 

Abandonment,   acceptance  when  conclusive.     §  2728,   Civ.   Code 

Abandonment  accepted,  irrevocable.     §  2729,  Civ.  Code 

Abandonment  of  ship  affects  freightage,  how.     §  2730,  Civ.  Code 

Insurer  liable  when  refuses  to  accept  valid  abandonment.     §  2731,  Civ.  Code 

Loss  may  be  recovered  if  insured  omits  to  abandon.     §  2732,  Civ.  Code 

Valuation,    when   conclusive.     §  2736,    Civ.    Code 82 

Insurer  is  liable  for  partial  loss,  when.     §  2737,  Civ.  Code 82 

Insured  is  entitled  to  profits,  when.     §  2738,  Civ.  Code 82 

Valuation  in  policy  apportioned  when  part  only  is  exposed.     §  2739,  Civ.  Code  82 


174  INDEX. 

Marine     insurance     companies — Continued.  Page. 

Loss  of  profits  insured  and  valuation  fixes  their  amount,   when  presumed. 

§  2740,    Civ.    Code 82 

Estimating  loss  under  an  open  policy,  rules  of.     §  2741,  Civ.  Code 82 

Cargo  when  damaged.     §  2742,   Civ.   Code 83 

Liability  of  insurer  for  expenses  and  labor.     §  2743,  Civ.  Code 83 

Liability  of  insurer  on  contribution.     §  2744,  Civ.  Code 83 

Contribution,   demand  against  others  for.     §  2745,   Civ.   Code 83 

Partial  loss  of  ship  or  equipment,  depreciation.     §  2746,  Civ.  Code 83 

Medical   examinations. 

Of  member  of  fraternal  benefit  society.     §  7,  Act 111 

Measure  of  indemnity. 

Valuation  in  policy  of  marine  insurance  when  conclusive.     §  2736,  Civ.  Code —  82 

Marine  insurer  upon  partial  loss.     §  2737,   Civ.  Code 82 

Profits.     §  2738,    Civ.    Code —  82 

Valuation  apportioned.     §  2739,   Civ.   Code 82 

Valuation  applied  to   profits.     §  2740,    Civ.    Code 82 

Estimating  loss  under  open  policy.     §  2741,   Civ.   Code 82 

Arrival  of  thing  damaged.     §  2742,   Civ.   Code 83 

Labor  and  expenses.     §  2743,  Civ.  Code 83 

General  average.     §  2744,  Civ.  Code 83 

Contribution.     §2745,    Civ.    Code 83 

One  third  new  for  old.     §  2746,  Civ.  Code 83 

In  fire  insurance  policy.     §  2756,    Civ.   Code 84 

Under  policy  of  life  or  health  insurance.     §  2766,  Civ.  Code 85 

Miscellaneous  insurance  companies. 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code —  7 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Includes  cyclone,   tornado,   windstorm   and  lightning  insurance.     §  594,   Pol. 

Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Mortuary  fund.     (See  Reserve  Fund;  Fraternal  Benefit  Societies.) 

Mutual   benefit  and   life   associations. 

Formation  of  a.     §  452a,  Civ.   Code 48 

Levying  of  assessments  of  and  limits  thereon.     §  453,  Civ.  Code 48 

•     Annual  payments.     §  453,  Civ.  Code 48 

Articles  of  incorporation  of.     §  452a,  Civ.  Code 48 

By-laws  of.     §  453,  Civ.  Code 48 

Members,   number  of.     §  452a,    Civ.   Code .—  48 

Powers  and  liabilities.     §  453,  Civ.  Code '-  48 

Purpose  of.     §  452a,   Civ.   Code——— —  48 

Mutual  fire  insurance  companies.     (See  Insurance  Companies.) 

May  adopt  by-laws.     §  2,   Act .—  102 

Policyholder  becomes  member  of  corporation.     §  3,  Act —  102 

Assets  of  an  organization.     §  4,   Act - 102 

Expenses,  limitation  of.     §  5,  Act 102 

Amount  of  single  risk.     §  6,  Act 103 

Admission  of  foreign  companies.     §  7,  Act , 103 

May  issue  non-assessable  policies,  when.     §  8,  Act , 103 

Premiums  to  be  paid  in  cash.     §  8,  Act _ 103 

Assessment    by.     §  9,    Act , 104 

Withdrawal  or  cancellation  of  policy.     §  10,  Act 104 

Dividends,  when  declared.     §  11,  Act 104 

Statement,   annual,   must  be  filed.     §12,   Act. 104 

Insolvent  when.     §  13,  Act —  104 

Organization    of.     §  13,    Act — — 104 

Laws  applicable  to.     §  14,  Act _ , 105 

Taxation   of.     §  14,    Act 105 

Mutual   insurance  companies.     (See  Mutual  Fire  Insurance  Companies;  Mutual 
Life  Insurance  Companies.) 

Assets  required  in  lieu  of  capital  stock.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Organized  under  act  of  1851,  may  report  how.     §  614,  Pol.  Code 27 


INDEX. 


175 


Mutual  life  insurance  companies.     (See  Life  Insurance  Companies.)  Page. 

Assets  required.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Capital  stock,  amount  of.     §  437,   Civ.   Code 44 

Guarantee,  fund  of.     §  437,  Civ.  Code 44 

Guarantee  fund  of  shall  consist  of.     §  438,  Civ.  Code 44 

Fixed    capital.     §  439,    Civ.    Code 45 

Declaration  of  fixed  capital.     §  440,  Civ.   Code 45 

Guarantee  notes  and  interest,  how  disposed  of.     §  441,  Civ.  Code 45 

Insured  to  be  entitled  to  note,  when.     §  442,  Civ.  Code 46 

Number  of  directors  may  be  altered,  how.     §  443,  Civ.  Code 46 

By-laws  of  may  provide  protection  of  stockholders.     §  445,   Civ.  Code 46 

Premiums  of,  how  payable.     §  446,   Civ.   Code . 46 

Policy  of  to  contain,  what  provisions.     §  450,  Civ.  Code > 46 

Dividends  of,   how  made.     §  452,    Civ.    Code 48 

N 

Name. 

Of  company,  commissioner  may  reject.     §  609,  Pol.  Code 24 

Nationality.     (See  Neutrality.) 

Neutrality. 

Shipment  must  carry  papers  of.     §  2688,  Civ.  Code 76 

Newspaper. 

Publication  of  statement  in.     §  611,  Pol.  Code 24 

Of  general  circulation.     §  611,  Pol.  Code 24 

Weekly.     §  611,    Pol.    Code 24 

Notice  of  loss.     (See  Loss.) 

Insurer  exonerated  when.     §  2633,   Civ.   Code 71 

Preliminary  proofs.     §  2634,  Civ.  Code 71 

Waivers  of  defects  in.     §  2635,   Civ.   Code 71 

Waivers  of  delay  in  presentation.     §  2636,  Civ.  Code 71 

Certificate  of,  when  dispensed  with.     §  2637,  Civ.  Code 71 

Notice.     (See  Publication;  Newspapers.) 

Commissioner  must  give   on   insolvency.     §  603,    Pol.    Code 20 

Service  on  general  agent.     §  616,  Pol.   Code 28 

O 
Office. 

Expenses  of.     §  591,    Pol.   Code 6 

Office  of  insurance  commissioner  must  be  located  in  San  Francisco.     §  592, 

Pol.    Code    7 

Organization  of  insurance  companies. 

Limit  of  expenses  on.     §  597,  Pol.  Code 15 

Over-insurance.     (See  Premiums;   Marine  Insurance.) 

Owner. 

Partner  or  part.     §  2590,  Civ.  Code___ ; 65 

Successive.     §  2592,    Civ.    Code 65 

Transfer.     §  2593,    Civ.    Code 65 

P 

Penalty.     (See  Arson;  Crimes;  Fines.) 

For  disobedience  to  order  of  commissioner.     §  599,  Pol.  Code 17 

For  failure  to  file  annual  statement.     §  617,  Pol.  Code 29 

Payable  on  demand  of  insurance  commissioner.     §  634&,  Pol.  Code 37 

Arson.     §  455,  Pen.  Code 91 

Burning  or  destroying  property  insured.     §  548,   Pen.   Code 92 

Presenting  false  proofs  upon  policy.     §  549,  Pen.  Code 92 

Performance.     (See  Warranties.) 

When  breach  of  future — does  not  avoid  policy.     §  2609  Civ.  Code 67 

Permit.     (See  Certificate  of  Authority;  Licenses.) 


176  INDEX. 

Physician.  Page. 

Must  examine  applicants  for  membership  to  fraternal  benefit  societies.     §  7, 

Act. 111 

Plate  glass  insurance  companies. 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code rj  7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Policy.     (See  Policies;  Policyholder.) 

Lost.     §  598,  Pol.  Code 16 

How  issued  and  by  whom  signed.     §  416,  Civ.   Code 40 

Of  life  insurance  corporations  to  contain  what  provisions.     §  450,  Civ.  Code 46 

Defined.*    §  2586,  Civ.  Code 64 

What  must  be  stated  in.     §  2587,  Civ.  Code 64 

Whose   interest   covered   by.     §  2588,    Civ.    Code 65 

By  agent  or  trustee,  insurance.     §  2589,  Civ.  Code 65 

By  part  owner,   insurance.     §  2590,   Civ.   Code 65 

General    terms.     §  2591,    Civ.    Code 65 

Successive  owners.     §  2592,  Civ.  Code 65 

Transfer  of.     §  2593,  Civ.  Code 65 

Is  opened  or  valued.     §  2594,  Civ.  Code 65 

Open,  denned.     §  2595,  Civ.  Code 65 

Value,  denned.     §  2596,  Civ.  Code 66 

Running,  defined.     §  2597,  Civ.  Code 66 

Effect  of  receipt  in.     §  2598,  Civ.  Code 66 

Agreement  not  to  transfer  when  void.     §  2599,  Civ.  Code 66 

Earned  premium  on,  when.     §  2616,  Civ.  Code 68 

When  entitled  to  return  of  premium.     §  2617,  Civ.  Code 68 

When  not  entitled  to  return  of  premium.     §  2618,  Civ.  Code .. 69 

Premium  returnable  when.     §  2619,  Civ.  Code 69 

Policy  of  insurance. 

Insurer  must  exhibit  to  commissioner,  lost  policy.     §  598,  Pol.  Code 16 

Registration  of  life.     §  634,  Pol.  Code 36 

Fee   for   registration   of.     §  605,   Pol.    Code : 22 

Life,  must  contain  what  provisions.     §  450,   Civ.   Code 46 

Policy  Holder. 

May   obtain   information.     §  598,    Pol.    Code 16 

Port  Wardens. 

Sales  of  wrecks  and  merchandise  for  foreign  underwriters.     §  2507,  Pol.  Code  38 

Notice  of  sale,  how  given.     §  2508,  Pol.  Code t 38 

Must  not  be  interested  in  insurance.     §  2509,  Pol.  Code 38 

Premiums. 

Company  collecting  for  more  than  one  company  must  give  separate  bond  for 

each    company.     §  624,    Pol.    Code 32 

When    earned,    defined.     §  2616,    Civ.    Code 68 

Return,"  defined.     §  2617,  Civ.   Code 68 

Not  allowed,  when.     §  2618,   Civ.   Code 69 

Return  of  for  fraud.     §  2619,  Civ.   Code 69 

Return  of  over-insurance  by  several  insurers.     §  2620,  Civ.  Code 69 

Contributions  to,   on  over-insurance  by  simultaneous   policies.     §  2621,   Civ. 

Code    69 

Contribution  to,  returned  on  successive  policies.     §  2622,  Civ.  Code 69 

Principal  agent.     (See  Agent,  General.) 

Process.     (See  Agent,  General;  Service  of  Process.) 

Service  on  general  agent.     §  616,  Pol.  Code 28 

Profits. 

What  not  to  be  treated  as     §  417,  Civ.  Code 40 

When  separately  insured  what  portion  recoverable.     §  2738,  Civ.  Code 82 

Valuation  applied  to.     §  2740,  Civ.  Code 82 

Property.     (See  Real  Estate;  Investments.) 


INDEX.  177 

Proofs.  PAGE. 

Preliminary,  of  loss.     §  2634,   Civ.   Code 71 

Waivers  of  defects  in  notice.     §  2635,  Civ.  Code 71 

Delay  in  presentation  of.     §  2636,  Civ.  Code . 71 

Publication.     (See  Newspapers.) 

Of  synopsis  of  Annual  Statement.     §  611,  Pol.  Code 24 

Q 

Qualifications. 

Of  insurance  company  to  obtain  certificate  of  authority.     §  607,  Pol.  Code 23 

R 

Real  Estate.     (See  Property;  Investments.) 

"What  a  company  may  purchase.     §  415,  Civ.  Code 40 

State  Board  to  equalize  assessments  of.     §  27,"  Act 155 

Receipt. 

Acknowledgment  of  evidence  of  payment  of  premium.     §  2598,  Civ.  Code 66 

Receiver. 

Apointment  of.     §  604,  Pol.  Code 21 

Powers  of.     §  604,   Pol.   Code , 2 21 

For  Fraternal   Benefit  Societies.     §  25,   Act „ lift 

Record. 

Insurance  commissioner  must  keep.     §  600,  Pol.  Code 17 

Registration  of  Life  Policies. 

How  registered.     §  634,  Pol.  Code 36 

Fee  for  registering.     §  605,  Pol.  Code 22 

Deposit  of  securities  for  benefit  of.     §  634,  Pol.  Code 36 

Reinsurance. 

Of  business  by  receiver.     §  604,  Pol.   Code 21 

What  is.     §  2646,   Civ.  Code 72 

Information  must  be  communicated.     §  2647,  Civ.   Code 73 

Presumed  to  be  a  contract  of  indemnity  against  liability.     §  2648,  Civ.  Code_  73 

Original  insured  has  no  interest  in.     §  2649,  Civ.  Code i 73 

Renewal.     (See  Certificate  of  Authority;  Certificate  of  Compliance;  Licenses.) 

Representation.     (See  Concealment  and  Representation;  Marine  Insurance.) 

Report.     (See  Annual  Report;  Annual  Statement.) 

Surplus  line  broker.     §  596,   Pol.   Code 13 

Of  company,  how  verified.     §  610,   Pol.  Code , 24 

Of  mutual  companies  organized  under  act  of  1851.     §  614,  Pol.  Code 27 

Reserve.     (See  Reinsurance  Reserve.) 

Required  of  liability  insurance  companies.     §  602a,  Pol.  Code 19 

Required  of  other  companies.     §  602,  Pol.  Code , 18 

Retaliatory  Law.     (See  Taxation.) 

Applying  foreign  discriminatory  law.     §  622,   Pol.    Code __  31 

Valuation  of  policies  of  life  insurance.     §  628,  Pol.  Code .     34 

When  appliable  to  companies  of  other  states.     §  3,  Act 136 

Revocation.     (See  Licenses;  Certificates  of  Authority.) 
Risk. 

Limitation   on.     §  428,    Civ.   Code 43 

When  alteration  increases.     §  2753,  Civ.  Code . 84 

When  alteration  does  not  increase.     §  2754,  Civ.  Code . _  84 

May  be  issued  upon  what  by  county  fire  insurance  companies.     §  8,  Act 99 

When  acts  of  insured  do  not  increase.     §  2755,  Civ.  Code 84 

County  fire  insurance  companies  must  classify.     §  9,  Act  ._ — ._. 99 

Limitations  upon,  by  county  fire  insurance  companies.     R  10,  Act 99 


12— IL 


178  INDEX. 

s 

Seaworthiness.     (See  Marine  Insurance;  Voyage.)  Page. 

Warranty  of.     §  2681,  Civ.  Code 75 

What  is.     §  2682,   Civ.   Code 75 

At  what  time  must  exist.     §  2683,  Civ.  Code 76 

What  things  are  required  to  constitute.     §  2684,  Civ.  Code 76 

When  a  ship  becomes  unseaworthy.     §  2686,  Civ.  Code 76 

Different  degrees  of  on  voyage.     §  2685,  Civ.  Code 76 

For  purposes  of  insurance  on  cargo.     §  2687,  Civ.  Code _  76 

Salary.     (See  Compensation.) 

Seal  of  office. 

Fee  for  attaching.     §  605,   Pol.   Code 22 

Secret  benevolent  associations.     (See  Fraternal  Benefit  Societies.) 

Exempt  from  insurance.     §  630,   Pol.   Code 35 

Secretary  of  State. 

Fees   of.     §  409,    Pol.    Code 132 

Foreign   corporations.     §  408-409,    Civ.    Code 134 

Service  on,  when  valid.     §  405,  Civ.  Code 134 

Securities.     (See  Deposit.) 

Annual  examination  of.     §  621,  Pol.   Code 31 

Service  of  Process.     (See  Agents;  Process.) 

How  made  on  insurance  commissioner.     §  616,  Pol.  Code 28 

When  deemed  complete.     §  616,   Pol.   Code 28 

How  made  on  general  agent.     §  616,  Pol.  Code 28 

Sprinkler  insurance  companies.     (See  Insurance  Companies.) 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code 18 

Standard  form  of  fire  insurance  policy. 

Liability   limited.     §1,    Act 125 

Policy  must  be  countersigned  by  agent.     §  1,  Act 125 

What  property  not  covered.     §  1,  Act 125 

What   hazards   not  covered.     §  1,   Act , 126 

Policy  void  when.     §  1,  Act 126 

Policy  suspended,   when.     §1,  Act 126 

Insurer  not  liable  when.     §  1,  Act 127 

Deduction  for  removal  when  endangered  by  fire.     §  1,  Act 127. 

Policy  may  be  canceled  when.     §  1,  Act 127 

Duty  of  insured  in  case  of  loss.     §  1,  Act 127 

Ascertainment  of  amount  of  loss.     §  1,  Act :_  128 

Options  of  company  in  case  of  loss.     §  1,  Act ■__ 129 

Apportionment  of  loss.     §  1,  Act 129 

Loss,    when    payable.     §  1,    Act 129 

Non-waiver  of  appraisal  or  examination.     §  1,  Act 4 129 

Subrogation.     §  1,    Act     129 

Time  for  commencement  of  action.     §  1,  Act 129 

Insured,    defined.     §  1,   Act 129 

Loss,    defined.     §  1,    Act 129 

Time  of  loss  or  damage,  defined.     §  1,  Act 129 

What  shall  be  printed  on  outside  of  policy.     §  2,  Act 130 

Apportionment  of  loss  may  be  waived  when.     §  3,  Act 130 

Size  of  type  to  be  used.     §  4,  Act __: 130 

County  mutuals  need  not  use  standard  form.     §  4,   Act '. 130 

What  may  be  added  to  policy.     §  6-7-9-10,  Act 130-131 

Rider  affecting  standard  form.     §8,  Act 131 

Change  in  wording  may  be  made,  when.     §  11,  Act 131 

Deviation  from  standard  form.     §  12,  Act 131 

Punishment  for  violation  of.     §12,  Act 131 

Policy  violating  standard  form  valid  against  company.     §  12,  Act 131 

Act  effective,   when.     §  13,   Act 131 


INDEX.  179 

Statement.     (See  Annual  Statement;  Annual  Report.)  Page. 

Must  be  made  on  basis  of  gold  coin.     §  627,  Pol.  Code 33 

State  Treasurer.     (See  Treasury  of  State.) 

Statutes. 

Act  of  March  26,   1868 93 

Act  to  facilitate  the  giving  of  bonds  required  by  law 96 

Act  to  require  payment  of  certain  premiums  to  counties  by  fire  insurance 

companies  not  organized  under  laws  of  state 97 

Act  to  provide  for  the  organization  and  management  of  county  fire  insur- 
ance companies 97 

Act  providing  for  the  organization  and  management  of  mutual  fire   insur- 
ance companies 102 

Act  providing  for  the  insuring  of  livestock  on  the  assessment  plan 105 

An  Act  for  the  regulation  and  control  of  fraternal  benefit  societies 109 

An  Act  defining  certain  classes  of  contracts  for  the  exchange  of  indemnity, 

prescribing  regulations  therefor  and  fixing  license  fee 122 

Act  to  establish  standard  form  of  fire  insurance  policy,  etc 125 

An  Act  taxing  corporations 135 

Steam  boiler  insurance.     (See  Boiler  and  Machipery  Insurance  Companies.) 

Stipulation  for  service  of  papers. 

Fee  for  filing.     §  605,   Pol.   Code 22 

Companies   must  file.     §  616,   Pol.   Code 28 

Is  irrevocable  (Note).     §  616,  Pol.  Code 28 

Stock.     (See  Capital  Stock.) 

Directors  may  asesss,   when.     §  331,   Civ.   Code 39 

Limitation  on  amount  of  assessment.     §  332,  Civ.  Code 39 

Subscriptions. 

To  capital  stock,  opened  and  how  collected.     §  414,  Civ.   Code 39 

Payment  of.     §  424,  Civ.  Code 42 

Summons.     (See  Service  of;  Process.) 

Sureties.     (See  Bond.) 

Of  surplus  line  broker.     §  596,  Pol.  Code 14 

Surety  company  may  be  accepted  as  sole  surety.     §  955,  Pol.  Code 37 

May  become  liable  for  less  than  full  penal  sum.     §  956,  Pol.  Code 37 

Surety  corporations. 

May  become  sureties  on  undertakings  and  bonds.     §  1056,  C.  C.  P 87 

Not  required  to  justify.     §  1057,  C.  C.  P 87 

May  justify,   how.     §1057,    C.    C.   P 89 

Surety  companies.     (See  Surety  Corporations;   Fidelity  and  Surety  Companies; 
Insurance  Companies.) 

Commissioner  must  certify  list  of  to  county  clerks.     §  625a,  Pol.  Code 33 

May  be  sole  surety.     §  955,  Pol.  Code 37 

Surplus.     (See  Profits.) 

Surplus  line  broker. 

Who  is.     §  596,  Pol.  Code 13 

How    licensed.     §  596,    Pol.    Code 13 

Fee.     §  596,    Pol    Code 13 

Bond  of.     §  596,  Pol.   Code 13 

Report  of  insurance  procured,  canceled,  etc.     §  596,  Pol.  Code 13 

Annual   report.     §  596,   Pol.   Code 13 

Tax  on  premiums.     §  596,  Pol.   Code 13 

Revocation  of  license  of.     §  596,  Pol.  Code 13 

New  license  cannot  be  issued,  when.     §  596,  Pol.  Code 13 

Surplus  line  law.     (See  Surplus  Line  Broker.) 

T 
Tables  of  mortality. 

In  determining  solvency  of  life  company.     §  602,  Pol.  Code 18 

Valuation  of  policies  of  life  insurance.     §  629,  Pol.  Code 34 

Of  fraternal  benefit   societies.     §  5,   Act 110 

Rates  of  fraternal  benefit  societies  must  be  based  on  what.     §  12,  Act 112 


180  INDEX. 

Taxation.     (See  Taxes.)  Page. 

Of  insurance  companies.     §  622,  Pol.  Code 31 

What  are  subject  to.     §  1,  Act  ___ 135 

Of   insurance    companies.     §  3,    Act .— — 1 — — .-  136 

Rate   of.     §3,    Act "136 

Retaliatory  provision.     §  3,  Act 136 

Deductions  allowed.     §  3,  Act 136 

Insurance  commissioner  must  report,  what.     §  11,  Act — : 143 

To  be  paid  to  state  treasurer.     §  22,  Act 1 151 

Protest  of.     §23,  Act  „ i — 151 

Controller  to  send  notice  of.     §  24,   Act 152 

Of  inter-insurance  associations.     §  8,  Act 124 

Taxes.     (See  Taxation.) 

Surplus  line.     §  596,   Pol.   Code 13 

Must  be  paid  on  basis' of  gold  coin.     §  627,  Pol.  Code 33 

Payable  on  demand  of  insurance  commissioner.     §  634&,  Pol.  Code 37 

Commissioner  may  commence  action  for.     §  634&,  Pol.  Code 37 

Rate  of.     §  3,  Act    ! 136 

Application  of  retaliatory  law.     §  3,  Act  , 136 

Team  and  vehicle  insurance  companies.     (See  Insurance  Companies.) 

How    classified.     §  594,    Pol.    Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  what  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,  when.     §  602,  Pol.  Code , 18 

Term  of  office.     (See  Insurance  Commissioner.) 

Title  insurance  companies. 

How  classified.     §  594,   Pol.   Code 7 

Capital,  amount  of.     §  594,  Pol.  Code 7 

May  do  other  kinds  of  insurance.     §  594,  Pol.  Code 7 

Insolvent,    when.     §  602,    Pol.    Code 18 

Dividends,  amounts  to  be  reserved  before  making.     §  432,  Civ.  Code 43 

Dividends,   declared  on  what.     §  432,   Civ.   Code 43 

Surplus  fund.     §  432,  Civ.  Code 43 

Funds  may  be  invested  in  plant.     §  432,   Civ.  Code 43 

Tornado  insurance.     (See  Miscellaneous  Insurance  Companies.) 

Treasurer.     (See  Treasury  of  State.) 

Treasury  of  State. 

Securities  must  be  deposited  in.     §  594a,  Pol.  Code 10 

Taxes  payable  to.     §  22,  Act 151 

Trustees. 

Insurance  by  agent  or.     §  2589,  Civ.  Code 65 

U 

Undertaking.     (See  Bond;  Surety  Corporations.) 

Underwriters.     (See  Fire  Patrol.) 

Unseaworthy.     (See  Seaworthy;  Marine  Insurance.) 

Unreasonable  delay  in  repairing  exonerates  insurer.     §  2686,  Civ.  Code 76 

V 

Valuations. 

Commissioner  may  employ  actuary  to  make.     §  601,  Pol.  Code 17 

Retaliatory  provisions  as  to.     §  628,  Pol.  Code 34 

Companies  must  furnish  data  for.     §  629,  Pol.  Code 34 

Upon  what  tables  of  mortality.     §  629,  Pol.  Code 34 

Of  policies  of  fraternal  benefit  societies.     §  23,  Act j. 117 

Voyage.     (See  Marine  Insurance;  Deviation.) 


INDEX.  181 

W 

Warranties.  Page. 

Is  expressed  or  implied.     §  2603,  Civ.  Code 66 

Form  of.     §  2604,  Civ.  Code 67 

Express,  must  be  in  policy.     §  2605,  Civ.  Code 67 

May  relate  to  past,  present  or  future.     §  2606,  Civ.  Code 67 

Past  or  present,  defined.     §  2607,  Civ.  Code 67 

Future,   defined.     §  2608,   Civ.   Code 67 

Breach  of  future.     §  2609,  Civ.  Code 67 

Breach  of,  avoids  policy.     §  2610,  Civ.  Code 68 

Breach  of  immaterial  provision.     §  2611,  Civ.  Code 68 

Warden.     (See  Port  Warden.) 

Wind  Storm  Insurance.     (See  Miscellaneus  Iusurance  Companies.) 

Withdrawal  of  Companies. 

Proceedings  on.     §  595,  Pol.  Code 11 

Publication  of  notice  of.     §  631a,  Pol.  Code 35 

Workmen's  collective  insurance.     (See  Miscellaneous  Insurance.) 

Wrecks.     (See  Marine  Insurance.) 

Sale  of,  by  port  wardens.     §  2507,  Civ.  Code 38 

Notice  of  sale,  how  given.     §  2508,  Civ.  Code 38 


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